File on Attrition

8/12/2019 File on Attrition

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Table of Contents

1. Introduction ...32. Why do people leave organizations...53. Controlling attrition74. Is attrition always ad!..............................................................................145. "ttrition in I# $ I#%& industries23'. Calculating "ttrition347. Challenges (aced y )* +anagers............................................3,-. Co+ating "ttrition.4-,. *etention strategies..............................................531.Conclusion..................................................'4

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Introduction

Attrition

Defining attrition:/" reduction in the nu+er o( e+ployees through retire+ent0resignation or death/

Defining Attrition rate:/the rate o( shrinage in size or nu+er/

In the est o( worlds0 e+ployees would love their os0 lie their coworers0 wor hard

(or their e+ployers0 get paid well (or their wor0 have a+ple chances (or advance+ent0and (leile schedules so they could attend to personal or (a+ily needs when necessary."nd never leave.

ut then theres the real world. "nd in the real world0 e+ployees0 do leave0 either ecausethey want +ore +oney0 hate the woring conditions0 hate their coworers0 want a change0or ecause their spouse gets a drea+ o in another state.

Intelligent e+ployers always realize the i+portance o( retaining the est talent. *etaining

talent has never een so i+portant in the Indian scenario6 however0 things have changedin recent years. In pro+inent Indian +etros at least0 there is no dearth o( opportunities (or

the est in the usiness0 or even (or the second or the third est. *etention o( ey

e+ployees and treating attrition troules has never een so i+portant to co+panies.

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In an intensely co+petitive environ+ent0 where )* +anagers are poaching (ro+ each

other0 organizations can either hold on to their e+ployees tight or lose the+ to

co+petition. or gone are the days0 when e+ployees would stic to an e+ployer (or years

(or want o( a etter choice. 8ow0 opportunities aound.

It is a (act that0 retention o( ey e+ployees is critical to the long9ter+ health and successo( any organization. #he per(or+ance o( e+ployees is o(ten lined directly to :uality

wor0 custo+er satis(action0 and increased product sales and even to the i+age o( a

co+pany. Whereas the sa+e is o(ten indirectly lined to0 satis(ied colleagues and

reporting sta((0 e((ective succession planning and deeply e+edded organizational

nowledge and learning.

In todays scenario ATTRITION has become the most dangerous alarm to all HR

employees' ears and Organiation is facing troubles to fight it out!

#he e+ployee attrition rate is the nu+er o( eits during the period divided y theaverage nu+er o( e+ployees.

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"hy do people lea#e Organiations

&o+e o( the reasons why e+ployees leave there os are;9

1. $eople don't get integrated!


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eing a gloal or niche industry leader0 value o( the rand o( the organization0

should also e +ade eplicit.

1. No career planning!"re people aware o( the ways in which they can grow in

the organization!

11.The climate filled %ith politics@grape vineA

what the new +anage+ent says is not well co++unicated with all and leads to too

+any ru+ors0 (ew :uit on this ru+ors

+,! Attitude of -anagement

plays a very i+portant role0 i( the +anage+ent is rational the e+ployees stic to the

organization or else they leave

Controlling Attrition

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#he road ahead (or the B> (ir+s is very i+portant ecause i( they are not ale to controlthe attrition rate they will loose their co+petitive edge in the gloal +aret. or thiscertain0 strategies and certain i+prove+ents are needed to e +ade in the processes(ollowed.

$ro#iding .omething )*tra

It?s always aout providing so+ething etra to your e+ployees. ood salary is so+ethingwhich is a standard in the industry. &o what needs to e done is to give so+e pers to thee+ployees. #hey need to e given pers lie rewards (or their good per(or+ances. >wingto the odd woring hours0 the e+ployees have very tattered personal lives. &o pers lie(oreign tours or co+pany sponsored vacations are always a welco+e gi(t.

Honoring $erformers

Ber(or+ance ased incentives is a +ust in the B> co+panies as these are generally the

e+ployees who gets piced up y the place+ent hunters +ost o(ten. #hese e+ployees arealso a+ong the +ost aspiring ones in the co+pany so there is a need to give the+ a+pleopportunity to rise and progress in the organization.

/uilding Relationship

*elationship is so+ething which lasts over ti+e. &o0 i( a co+pany needs to hold on to itse+ployees0 it needs to uild a strong onding with the e+ployees. "s we will see in thecase o( >((ice9#iger discussed elow0 there is a need to instill pride in the e+ployees.

#hey need to e shown that the wor done y the+ is i+portant. "lso0 wor needs to eshown in the (or+ o( challenge to the e+ployee rather than ust a +onotonous routinewor. Brovide e+ployee with %&>Bs0 which would give the+ a (eeling that they areworing (or the+selves and that they are an inseparale part o( the co+pany.

The )))0-odel

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HR $ractices

)* is the +ost critical depart+ent in any B>. While conducting the recruit+ent0 it is in

the hands o( )* to ring the right ind o( people. )* needs to identi(y the e+ployeeswho would stic with the co+pany and not get the e+ployees solely ased on the:uali(ications and co++unication sills.


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the industry.

y providing indepth in(or+ation and insights on )* issues0 the survey showed co+panies how ele+ents o( therewards syste+s could e lined to usiness results.

#he &tudy0 now in its third year0 helped I#9I#%& organizations in India understand+aret practices related to total rewards and ascertain +aret pay across all levels. In thisway0 it helped (acilitate decision +aing in areas such as co+pensation and ene(itsincluding pay philosophy0 pay :uantu+0 pay structure0 internal parity0 ite+s o( pay0 etc.

#he 8"&&C>ctoer98ove+er0 24 phase reported higher e+ployeeretention as a result o( the +easure. In(osys has said in its guidance that it epects salaryhies to the tune o( 12915 percent in inancial Gear 2'.


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co+panies.

H>>FI8 %G>8D &"H"*I%&; >C& E%& #> &.

I#%&9B> services co+panies in India are also giving a eener loo to their Beoplespers0 while woring cooperatively with conte+poraries to eep poaching down. &igningo( ilateral agree+ents etween I#%& (ir+s is not unco++on. >rganizations are puttingin place nor+s and a code o( ethics to eep e+ployees (ro+ straying.

I#%&9B> (ir+s are also providing a host o( ene(its to e+ployees (ro+ luuries such ashousing sche+es0 low rate loans0 pic and drop0 attractive catering to having spousesworing in the sa+e organization and recruiting the non recruitales @lie housewivesand old age peopleA.

"t the end o( the day0 it is apparent that etter )* policies can result in +ore co++ittedand loyal +anpower. "s long as I#9I#%& organizations concentrate on issues such ase+ployee retention0 provide wor environ+ents that co+ine wor with pleasure0encourage continuous learning and treat e+ployees as i+portant /internal/ custo+ers0India will re+ain a leading provider o( high :uality0 highly +otivated I# talent.

#)% >>D 8%W&Heading Indian so(tware and services +aors0 who have launched special strategies todevelop and strengthen their wor(orce0 have done so with signi(icant success. )ereswhat so+e o( the reputed Indian so(tware co+panies have +anaged to do with theirattrition (igures;

In(osys ept its attrition level at 1.4 percent during the :uarter ended &epte+er0 240+aing it a+ong the lowest (igures within the so(tware and services industry

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Wipro and &atya+ have witnessed a drop in their attrition levels over the third :uarter o(240 as co+pared to the second :uarter. While Wipro recorded a si percent drop @(ro+1- to 12 percent during J3A0 &atya+ dropped its attrition ratge (ro+ 1, to 15 percent.i9(le &olutions rought down its attrition (ro+ 1, percent (or the :uarter ended Kune024 to 1' percent (or the :uarter ended &epte+er0 24

)CH #echnologies success(ully controlled its attrition rate0 ringing it down to 13.1percent (or the :uarter ended &epte+erer0 240 lower than 14 percent in the :uarterended Kune 30 24&o+e o( the s+aller co+panies were also ale to do a etter o o( controlling attrition

A loo1 at ho% IT0IT). companies are holding on to their people:

"nti9poaching agree+entsetter pers)igher co+pensation levelsWell9laid career plans essential (or retaining e+ployeesetter recruiting +ethods to (ilter the right people (or right placesalance etween per(or+ance epectations and growth aspirations

8"&&C>< (oru+ has identi(ied )* as one o( the ey challenges o( theI#%&9B> industry and has (or+ed a special tas (orce to address short9ter+ challengessuch as "ttrition#o arrest this trend0 8"&&C>< is suggesting that co+panies loo into various optionslie good rewards0 onding progra+s0 (leile woring hours and providing a strongercareer path to e+ployees"ccording to 8"&&C>< a scienti(ic and analytical approach should e i+ple+ented y

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Indian I# services and I#%& co+panies to address their peoples issuesBay checs alone are not enough to +otivate e+ployees. n thecontrary0 when the departure o( certain e+ployees creates a setac @+ost o(tente+poraryA in ter+s o( wor continuity and progress0 is co++only considered adattrition. #he ti+e and invest+ent lost in hiring and developing these people along withthe cost o( (inding a replace+ent and ringing hi+ up to the productivity level0 all co+eat a high price.

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#he ter+ Lhealthy attritionM is used to signi(y the i+portance o( less productivee+ployees voluntarily leaving the organization.

ene(its o( healthy "ttrition

Desirale attrition also includes ter+ination o( e+ployees with who+ the organizationdoes not want to continue a relationship. It can e through resignation or y e+ployer.

*e+oves ottlenec in the progress o( the co+pany

Creates space (or the entry o( new talents0 eternal as well as internal

)elps planting La+assadorsM in the ecosyste+ that can have a positive i+pact on

the growth o( the organization

"ssists in evolving high per(or+ance tea+s

It also sends a necessary +essage to the other e+ployees that there is no place (or

inco+petence.

Deadwoods in any organization have a depilating i+pact on people. #hese are the

people who are not ale to scale their per(or+ance as per epectations0 lacpotential (or (uture or need disciplinary action.

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"s the rewards are li+ited0 usiness pressures do not allow the +anage+ent to

over9reward the per(or+ers0 ut when undesirale e+ployees leave the co+pany0the good e+ployees can e given the share that they deserve.

"ttrition rates are considered to e ene(icial in so+e ways;

I( all e+ployees stay in the sa+e organization (or a very long ti+e0 +ost o( the+

will e at the top o( their pay scale which will result in ecessive +anpower costs.

When certain e+ployees leave0 whose continuation o( service would have

negatively i+pacted productivity and pro(itaility o( the co+pany0 the co+pany isene(ited.

8ew e+ployees ring new ideas0 approaches0 ailities $ attitudes which can eepthe organization (ro+ eco+ing stagnant.

#here are also so+e people in the organization who have a negative and

de+oralizing in(luence on the wor culture and tea+ spirit. #his0 in the long9ter+0is detri+ental to organizational health.

Desirale attrition also includes ter+ination o( e+ployees with who+ theorganization does not want to continue a relationship. It ene(its the organizationin the (ollowing ways;

o It re+oves ottlenec in the progress o( the co+pany

o It creates space (or the entry o( new talents

o It assists in evolving high per(or+ance tea+s

#here are people who are not ale to alance their per(or+ance as per

epectations0 lac potential (or (uture or need disciplinary action. urther+ore0 asthe rewards are li+ited0 usiness pressures do not allow the +anage+ent to over9reward the per(or+ers0 ut when undesirale e+ployees leave the co+pany0 thegood e+ployees can e given the share that they deserve. &o+e co+panies

elieve attrition in any (or+ is ad (or an organization (or it +eans that a wrongchoice was +ade at the eginning while recruiting. %ven good attrition indicatesloss as recruit+ent is a ti+e consu+ing and costly a((air. #he only positive pointis that the realization has initiated action that will lead to cutting loss

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Di((erence etween good attrition $ ad attrition

While organisations la+ent the challenges that they have to constantly encounter as aconse:uence o( e+ployee turnover0 the truth is that all attrition is actually not detri+ental(or an organisation. It is in (act a +yth that every ti+e an e+ployee wals out o( the door0the organisation su((ers. &o+e attrition is desirale and necessary (or organisationalgrowth and develop+ent. #he point is how to di((erentiate etween what is co++onlynown as /good attrition/ and /ad attrition/. It is a thin line0 which is not always easy tounderstand.

It ene(its an organisation when certain e+ployees leave0 whose continuation o( servicewould have negatively i+pacted productivity and pro(itaility o( the co+pany. #here arealso so+e people who have a negative and de+oralising in(luence on the wor cultureand tea+ spirit. #his in the long9ter+ is detri+ental to organisational health.

>n the contrary0 when the departure o( certain e+ployees creates a setac @+ost o(tente+poraryA in ter+s o( wor continuity and progress0 is co++only considered adattrition. #he ti+e and invest+ent lost in hiring and developing these people along withthe cost o( (inding a replace+ent and ringing hi+ up to the productivity level0 all co+eat a high price.

#he ter+ /healthy attrition/ is used to signi(y the i+portance o( less productivee+ployees voluntarily leaving the organisation. *aan Dutta0 Bresident9)*0 Hupin0 agreesthat all attrition cannot e ter+ed as ad attrition. )e (eels that it has to e viewed in thecontet o(N

Ber(or+anceOcontriution: The levels of performance being delivered by theemployee

&ills: Are his skills relevant in today's business context

Hongitivity and growth: Has he reached his peak performance and jobsaturation.

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ene(its o( desirale attrition

Desirale attrition also includes ter+ination o( e+ployees with who+ the organisationdoes not want to continue a relationship. It can e through resignation or y the

e+ployer. #he :uestion isNhow does healthy attrition ene(it an organisation!

Dutta points out the signi(icant advantagesN

In(uses new lood into the organisation

%nhances aility (or eecution

8ew thoughts0 ideas and hence +ore innovation and creativity at wor

Fnowledge o( est practices (ro+ across the industry is rought in

Challenging status :uo0 which is very i+portant and hence challenges the way we

align wor It is also an opportunity to induct e+ployees at a lower cost with (resh sills and

co+petencies aligned to the current need o( usiness.

In any organisation the rewards are li+ited and usiness constraints do not allow the+anage+ent to share it with the deserving people and give the+ +ore. ut when non9per(or+ers leave the organisation0 it eco+es possile (or the per(or+ers to get their welldeserved rewards.

/#urnover is straight e:uation etween assets and liailities. #he +ore assets theco+pany has0 the healthier and prosperous it is. Desirale turnover +otivates not only thetop +anage+ent ut i( each and every e+ployee shares the ene(its0 the lowest hierarchy+otivates everyody and the net year the targets could e +uch higher0/ says Dr

Fash+ira Bagdiwalla0 Director @)* >perationsA0 Intas iophar+aceuticals @IBHA.

Bositive attrition also sends a necessary +essage to the other e+ployees that there is noplace (or inco+petence. #here is also a (lip side to the situation0 though the (act that goodattrition is a pointer to the (ailure o( the eisting syste+ and processes in the organisationin hiring the right e+ployee0 groo+ing and training hi+ to e a productive worer.

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It is true that an opti+al level o( attrition is healthy (or an organisation0 whether it is goodor ad. /"n average o( 2925 percent o( attrition does a good churn o( talent0 whichrings lateral thoughts to +ove the organisation in the right direction. "ttrition also helpsorganisation to align to e+ployee +aret needs and uild in a culture to sustain theiri+portant e+ployees0/ says &a+path &hetty0 Eice9Bresident0 Ber+anent &ta((ing nit0#ea+Hease &ervices. #he cost o( attrition can e co+puted with recruit+ent cost0productivity loss till replace+ent0 training cost0 cost o( new hire and loss o( sales.

"nalysing the i+pact

Broductivity and pro(itaility are oth i+pacted0 either negatively and positively0according to the type o( attrition. %ven good attrition is indicative o( loss as recruit+ent isa ti+e consu+ing and costly a((air. #he cost o( hiring is so+eti+es not less than two toti+es the salary o( the e+ployee.

"ny positive i+pact that can e +ade on attrition will have a direct i+pact onpro(itaility. %plains Bagdiwalla0 /*etentionOattrition +ay not e the ane o( a particular

industry0 ut a positive i+pact via proactive strategies will +ost assuredly have asigni(icant i+pact on pro(itaility.

"s co+petition increases0 co+panies will e under pressure to cur costs and stretchevery rupee. In such situations0 instead o( co+panies (ocusing on usiness9at9hand andputting /people/ issues on the ac urner0 they should (ocus on retaining high9per(or+ing e+ployees and eeping the+ +otivated./ #he est co+panies conse:uentlynow that in all usiness cli+ates taing +easures to retain valued e+ployees saves+oney0 preserves +argins and leads to etter usiness opportunities.

#he usiness i+pact o( good and ad attrition can e (elt in oth tangile and intangile

ways. "ccording to Dutta the tangile aspects are;

Hoss o( nowledge capital

Delay in eecution o( proectsOassign+ents

Hoss o( production

Increasing cost o( recruit+ent

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>n the intangile (ront it would result in;

I+pact on e+ployer rand

urden and urnout on eisting e+ployees

Internal in(or+ation and nowledge is eing shared outside

%isting tea+ also gets de(ocusedOde+otivated (or so+eti+e

>rganisations should eecute top o( the line retention policies in the right earnest andconsistency. Co+panies should e +ore e+ployee9centred0 to loo (or (urther ways to/ond/ e+ployees to their co+panies. Co+pany per(or+ance is opti+ally aligned to the

sills its e+ployees possess. )igh attrition i+plies that certain necessary sills arevulnerale or are not present due to e+ployees eing lost.

#his results in lower than opti+al levels o( usiness per(or+ance. LI( the sills areconstantly not availale0 the situation gets co+pounded into a crisis with ey proects0revenues0 etc0 getting a((ected. usiness is then reduced to ust +anaging crisis0/ addshardwa. or ea+ple0 a two percent attrition di((erence can +ae a signi(icantdi((erence in the ulti+ate usiness i+pact.

#here is no sure9(ire solution to control attrition. #he only way out is to +anage it well.#his can e done y having cautious hiring with proper syste+s and a process in place toensure that only the right talent is inducted into the co+pany. #hose (ound lacing inparticular sills or co+petence should e in(or+ed o( the epectations (ro+ the+ and putthrough a training process.

Continuous sills up gradation opportunities should also e provided to good e+ployees(or their growth and develop+ent.

#here is also a (lip side to the situationNthe (act that good attrition is a pointer to the(ailure o( the eisting syste+ and processes in the organization in hiring the righte+ployee0 groo+ing and training hi+ to e a productive worer. 8* anti0 Chair+anand


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I+pact o( attrition

Direct i+pact; " high attrition indicates the (ailure on theco+pany?s aility to set e((ective )* priorities. Clients andusiness get a((ected and the co+pany?s internal strengthsand weanesses get highlighted. 8ew hires need to econstantly added0 (urther costs in training the+0 gettingthe+ aligned to the co+pany culture0 etc.0Nall a challenge.

Indirect i+pact; Di((iculty in the co+pany retainingre+aining e+ployees and to what etent! Brole+ (or theco+pany in attracting potential e+ployees. #ypically0 highattrition also leads to a chronic or syste+ic cycleNattritionrings decreased productivity0 people leave causing othersto wor harder and this contriutes to +ore attrition. "ll thishas a signi(icant i+pact on the co+pany?s strength in+anaging their usiness in a co+petitive environ+ent.

&ource; *edileon eecutive search

"nalyzing the i+pact

Broductivity and pro(itaility are oth i+pacted0 either negatively and positively0according to the type o( attrition. %ven good attrition is indicative o( loss as recruit+ent isa ti+e consu+ing and costly a((air. LIt is tanta+ount to invest+ent that has gone astray.)aving said that0 good attrition +ini+izes the adverse i+pact on usiness while adattrition accentuates the loss0M stated 8air. #he cost o( hiring is so+eti+es not less thantwo to three ti+es the salary o( the e+ployee.

#he i+pact on wor progress is tre+endous0 particularly i( a proect is underway and one

o( the ey people leaves. LIt leads to dip in entire organizational e((iciency0 and a lotdepends on how it is ale to cover the setac0M pointed out *ao.

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>rganizations should eecute top o( the line retention policies in the right earnest andconsistency. #hey should e +ore e+ployee9centered and loo (or (urther ways toLondM e+ployees to their co+panies. LCo+pany per(or+ance is opti+ally aligned to the

sills its e+ployees possess. )igh attrition i+plies that certain necessary sills arevulnerale or are not present due to e+ployees eing lost. #his results in lower thanopti+al levels o( usiness per(or+ance. I( the sills are constantly not availale0 thesituation gets co+pounded into a crisis with ey proects0 revenues0 etc.0 getting a((ected.usiness is then reduced to ust +anaging crisis0M added hardwa. or ea+ple0 a 2percent attrition di((erence can +ae a signi(icant di((erence in the ulti+ate usinessi+pact.

Bs0 incre+ents0 rewards0 and a+ience are signi(icant retention +easures0M saidanti0 re+inding that oth inds o( attrition are unhealthy (or usiness. When productivepeople leave it is understandaly ad0 ut even when desirale attrition happens @a(tercrossing si to seven +onthsA0 it de(initely i+pacts the usiness. It is loss o( opportunityand invest+ent gone adly.

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Attrition in IT 3 IT). industries

Current scenario

#he usiness process outsourcing industry in India is growing at a pheno+enal pace.%ports were worth P 5.2 illion in 2'970 growing at 44.5 per cent and industry ody8assco+ has proected a 41 per cent growth in 2-9, to P 7.3 illion.

#he e+ployee ase has grown at a co+pounded annual growth rate o( 52.' per cent0 (ro+420 in 21922 to 30 4-0 in 2'927.

#he prole+ o( attrition is worse in I#%&O B> co+panies where (resh talent isintensively trained and inducted and then (urther groo+ed to the successive stages. In thisscenario0 the loss o( e+ployees can o(ten prove dangerous (or the co+panies? growth.

#he average attrition rate in this sector is still 3594Q.

"lso0 a 8assco+9)ewitt "ssociates survey says that the cost o( attrition in the I#OB>industry is 1.5 ti+es the annual salary.

"lar+ ells are ringing loudly in corporate corridors as attrition rates in I#%& "8D B>organizations average 22 percent as per a study conducted y the Indian Institute o(#echnology0 o+ay @II#9A with a sa+ple o( 102- I#%& co+panies in the country."nother survey done y BeopleNa artner group co+pany specializing in the

+anage+ent o( hu+an capital in I#%& organizationsNhas oserved that the averagetenure o( an I# pro(essional is less than three years.

#he I# enaled services @B>A industry is eing looed upon as the net ig e+ploy+entgenerator @8assco+ predicts 1.1 +illion o re:uire+ent y the year 2-A. It is howeverno easy tas (or an )* +anager in this sector to ridge the ever increasing de+and andsupply gap o( pro(essionals. nlie the so(tware industrycounterpart0 the B> )*+anager is not only re:uired to (ul(ill this responsiility0 ut also (ind the right ind o(people who can eep pace with the uni:ue wor patterns in this industry. "dding to this

is the issue o( +aintaining consistency in per(or+ance and eeping the +otivation levelshigh0 despite the +onotonous wor. #he toughest concern (or an )* +anager is howeverthe high attrition rate.

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In India0 the average attrition rate in the B> sector is approi+ately 3935

percent. It is true that this is (ar less than the prevalent attrition rate in the &+aret @around 7 percentA0 ut the challenge continues to e greater consideringthe recent growth o( the industry in the country. #he & B> sector is esti+ated

to e so+ewhere around three decades old. Feeping low attrition levels is a +aorchallenge as the de+and outstrips the supply o( good agents y a ig +argin.urther0 the salary growth plan (or each e+ployee is not well de(ined. "ll thisonly encourages poaching y other co+panies who can o((er a higher salary.

#he +uch hyped /wor (or (un/ tag nor+ally associated with the industry has in

(act ac(ired0 as +any individuals @+ostly (resh graduatesA0 tae it as a pas9ti+eo. >nce they oin the sector and understand its re:uire+ents0 they are taenaac y the long woring hours and later +onotony o( the o starts setting in.#his is the reason (or the high attrition rate as +any individuals are not ale to

tae the pressures o( wor.

#he toughness o( the o and ti+ings is not ade:uately conveyed.

esides the induction and proect training0 not +uch invest+enthas een done to

evolve a /continuous training progra+/ (or the agents.


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nature o( wor gravitated to higher9 end o( the value chain. Bressures on talent andpro(itaility increased in 25 and co+panies looed at ways to estalish co+petitiveadvantage. >rganizations created progressive practices to support continuousdevelop+ent o( its e+ployees.

#he Indian I#9I#%& industry continues to chart re+arale growth with an epectedgrowth o( nearly 2- per cent y eceeding &D 3' illion in annual revenues in G259'. With such growth0 the industry is also rapidly +aturing and +oving towards ahigher degree o( specialisation in various (ields lie recruit+ent0 e+ployee rewards andco+pensation. #he (indings o( this years study highlights these trends and the +aretanalysis on ey ele+ents o( co+pensation as well as prevalence o( critical ene(its and)* practices in the Industry

utsourcing co+panies are now

(alling prey to increasing wage costs (or specialized sills and the need to constantlyalign reward practices to the +aret continues.

"+ong the other (indings0 the study reports that there is growing trend o( the industrytowards di((erentiated total rewards practices ased on specialized sill and co+pleity.

4-Q o( the survey partners said that they paid pre+iu+s (or specialized sills at thehiring stage and the :uantu+ payout was o(ten le(t upon the recruit+ent +anagersdiscretion.

8early the sa+e nu+er reported that they designed (ied pay ranges and placede+ployees with hot sills in a higher :uartile within the sa+e range.

>ther +ethods adopted y the industry to retain such e+ployees were hot sillallowances6 sign on onuses and (re:uent salary revisions.

Fey )ighlights 9 #otal *ewards &tudy 25

"ttraction and retention o( e+ployees re+ain to e a ey issue (or the I# and I#esindustry. With +ore and +ore sectors +oving on a high growth traectory0 the talent war

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is increasing and attrition soaring. "t the unior level surveyed organizations reported anaverage attrition rate o( 3Q in the I# and 4Q in the I#es industry.

Capaility develop+ent continued to e area o( (ocus with 7Q o( the survey partners o(the 8"&&C>ut o( the ,1 I# organizationsapproached0 27Q reported a (or+al di((erentiation ased on hot sills0 whilst 41Q saidthat they clearly did not di((erentiate etween sills in speci(ic (unctions. #he rest

+aintained that they had no (or+al policy (or di((erentiation0 ut di((erentiatedco+pensation asis criticality o( resource re:uire+ent. In I#%& industry0 ''Q o( theorganisations reported a (or+al policy o( di((erentiating co+pensation ased on processco+pleity.

angalore and 8C* reported a 39'Q incre+ent in co+pensation over the nationalaverage.


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With 4Q attrition rate0 B* industry to grow at &P 'ln y 21; "&&>C)"C)"


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While the attrition rates in the Indian B> industry are etween a staggering 5 per centand ' per cent according to recent esti+ates0 attrition in even the Indian so(twareindustry0 too0 has eco+e a cause (or concern. )* pro(essionals say that a +aority o(call centre e+ployees :uit (or want o( ade:uate (uture prospects though a vast +aority o(those who :uit actually stic it out in the industry and +ove up the salary ladder (ro+ one

call centre to another.

"ttrition in the so(tware industry is also higher than the average (or the rest o( Indianindustry. "gainst the nor+ o( (ive per cent attrition across the entire Indian industry0 I#sector +aors lie In(osys0 &atya+ and Wipro have +anaged to ring attrition rates downto 1 to 15 per cent through a co+ination o( various )* e((orts in the past one year.

8ot surprisingly rapid sta(( turnover re+ains a cause (or concern (or the +aority o( therapidly growing I# O I#e& sector in India. "ccording to 8assco+ studies0 while only2-40 pro(essionals were e+ployed y the I# O I#e& industry in 1,,,920 thenu+ers had increased to one +illion in 2495.

"s de+and (or silled personnel has een rising steadily over the past two years0 issueso( e+ployee selection0 retention and co+pensation levels are assu+ing centre stage.Conse:uently0 I# sector e+ployers are increasingly (ocusing on how to hire and holdpro(essionals who +atter and are looing at )* strategies0 which are (ocused one+ployee engage+ent and providing their personnel with rewarding eperiences withinthe organisation.

)iring the right people and getting the+ to stay is the do+ain o( Fenea #echnologies0 a&9ased hiring and retention (ir+ that has set up a centre in )yderaad. )ead:uarteredin Bennsylvania0 its custo+ers vary in size and include +ore than 1 o( the ortune 5and hal( o( the Dow 3 co+panies.

We have (ound that the longevity o( an e+ployee in the worplace depends on hisengage+ent with that organisation. y engage+ent we +ean the atte+pts an organisationto +ai+ise the eperience o( an individual within that co+pany. We elieve that veryhighly satis(ied e+ployees do leave ut engaged e+ployees are liely to stay on +ore.We +ade that distinction and started +easuring the engage+ent space.

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In the process we developed two distinct spheres o( operations. >ne was to identi(y theright talent and second to recruit it. In the process o( talent ac:uisition we realised weneeded to i+prove the e((iciencies o( the talent +anage+ent syste+. We do this throughour product called Brove It.

In India the costs o( hiring are going up. With rising salaries recruit+ent udgets aregoing haywire. It now taes +ore ti+e to (ind a single person ecause e+ployers haveeco+e (inicy aout hiring ust the right people. In earlier days0 e+ployers looed (orleadership :ualities a(ter a nu+er o( years ut now they want leaders (ro+ the start. #hisis ecause so(tware organisations in India cater to gloal co+panies who epect high:uality output. &o high is the :uality epectation that certain co+panies in Indiaeperience worse than .- ratio in recruit+ent. #hat +eans that a(ter scrutinising 1pro(iles they cannot (ind even one person=

%+ployees are also gearing up (or higher epectations and are getting so(t sills0 whichwas not there ten years ago. Beople dress up very well when they go (or an interview and

spea %nglish with an accent. #he (ocus on outward appearance and loos has de(initelyincreased.

Indian B>s costs are rising as salaries and epectations also rise. In the years ahead0Indian B>s +ay ust lose their cost advantage and outsourcers will e (orced to lowercost locations. It is thus i+portant (or Indian to +ove into the higher end o( the worpyra+id such as research and develop+ent and innovation.

ut at the rate at which call centres are co+ing up0 in the net decade there is also the+uch igger danger o( India turning into a nation o( call centres with the +aority o( thestudent co++unity aspiring (or nothing +ore than to eco+e call centre e+ployees. #he+uch9taled aout high attrition rate in B>s is also nothing ut call centre e+ployees+oving (ro+ one call centre to another (or :uicer salary increases.

#he Indian B> Industry 8>W

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every wee0 and so+eti+es it gets very te+pting to resist. #he deterring (actor (or thiswould e +oving (ro+ one location to another with the (a+ily as housing and relocationare two +aor concerns o( the e+ployees. #hough this prole+ is eing taen care to acertain etent y a salary rise o( 1915Q annually on an average asis0 ut still it prevails.

"nother (actor which can e a ig deterrent is the wor ti+ings. #he wor ti+ings inB> are very odd. #his a((ects the (a+ily li(e o( the e+ployee. is :uiet low. #he nu+er o( (e+ales in B> can e as large as 35Q.

#his +eans that woring hour prole+ is :uiet acute in their case especially a(ter they get+arried0 as a(ter +arriage co+es social and (a+ily pressure to adust wor ti+ings andtae care o( (a+ilies.

#hough the aove two reasons are :uiet prevalent0 another reason which is eco+ing:uiet (re:uent is career growth. >nly 2 out o( 1 e+ployees on an average go on to e atthe senior level. #his +eans that other e+ployees loo (orward to change their o at

other places where they can get etter opportunities to progress. "lso0 another prole+arises with the +is9+atch o( epectations and :uali(ications o( the e+ployees. "longwith that0 so+e e+ployees see no career growth in this sector0 so they +ove on to otherco+panies in search o( changing the sector.

>ne +ore reason (or e+ployees leaving the (ir+ is higher education. #his is a prole+ as+ost o( the e+ployees in this sector are pretty young and aspiring. #hey oin the (ir+ecause o( lucrative salary. ut with ti+e0 they try to +ove on to other sectors or top+anage+ent and one o( the ways to do this is higher education.

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Calculating Attrition

"s the econo+y continues to i+prove0 +ore call centers are again grappling with an old(oe 9 high agent turnover @attritionA. While agent retention always rans a+ong the toppriorities o( call center +anagers0 it eco+es an even greater concern as os eco+e+ore plenti(ul. "nd (or good reason 9 when turnover rates are high0 the cost to anorganization can e sustantial.

eyond the ovious epense o( recruiting and training0 call centers with high turnovero(ten see :uality and productivity rates drop. #his can have a cyclical i+pact0 leading torepeat calls0 lower service levels0 a +ore stress(ul environ+ent and0 in turn0 higherturnover. iven the enor+ous i+plications0 turnover should e traced and +anaged ustas diligently as other ey per(or+ance indicators.

CA5C65ATIN( ANN6A5I7)D T6RNO8)R

While turnover is a (act o( li(e in any organization0 turnover rates di((er greatly (ro+ oneorganization to the net. or ea+ple0 so+e call centers operate with annual rates o( lessthan 5Q0 while others see rates o( well over 5Q percent. @"ccording to IC


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turnover is to calculate your annualized turnover accurately0 so that you have a consistentasis (or co+parison and trending.

#here are two (igures youll need in order to calculate annualized turnover 9 the nu+ero( agents eiting during each +onth0 and the average nu+er o( sta(( during those

+onths. @#he average nu+er o( agents on sta(( during the +onth is o(ten calculated ytaing an average o( the counts at the end o( each wee o( the +onth6 alternatively0 youcan tae an average o( the trained sta(( count at the eginning and end o( the +onth.A

#he (or+ula IC


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In the ea+ple we ust used0 the 2,Q annualized turnover rate +ight e categorized as(ollows;

T6RNO8)R CO.T. AND /)N)9IT.

#urnover can ring oth costs and ene(its to the call center. Costs are o(ten roadlycategorized as (ollows;

*ecruiting and hiring costs0 which +ay include the cost o( advertising (or new

positions0 the cost and ti+e involved in interviews and acground checs0 anycosts associated with search (ir+s or place+ent agencies0 and0 potentially0relocation costs.

#raining and orientation costs0 which include the direct cost o( training0 the cost

o( overall lower productivity (ro+ newer e+ployees0 and the cost o( overti+e i(current e+ployees +ust help cover hours.

In co++ercial organizations the +ost severe costs can e those associated with

poor custo+er service 9 lost sales0 reduced loyalty and outright de(ections toco+petitors.

#urnover can also yield ene(its. or ea+ple0 i( e+ployees leave (or other positions

within the organization0 the call center gains eperienced advocates in other depart+ents.#urnover +ay also reduce structural costs @assu+ing new e+ployees are rought in atlower pay scalesA and create the +eans (or the call center to ring in new e+ployees withneeded sills and (resh insights.

#he causes and costsOene(its will vary y type o( turnover. or ea+ple0 voluntaryeternal turnover is +ore o( a detri+ent to the organization than planned internal

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turnover. Do enough analysis to e ale to esti+ate the relative i+pact o( each type o(turnover.

ID)NTI9IN( TH) CA6.). O9 T6RNO8)R

#o +anage turnover0 you +ust understand what causes it. Co++on ways to identi(ycauses include;

Conduct a o and salary analysis vis99vis +aret conditions.

Conduct group +eetings with agents to discuss environ+ental (actors0 such as

stress0 +anage+ent style0 worload0 etc. *eview the orientation progra+ to ensure os are eing accurately represented to

new e+ployees

"nalyze eit interviews.

Conduct regular e+ployee satis(action surveys.

&peci(ic causes can vary widely @see the sidear elowA0 and identi(ying the top (ive toseven things driving turnover will e a huge step towards creating an appropriate

prevention strategy.

R)T)NTION .TRAT)(I).

While there is no single (or+ula (or agent retention that is appropriate (or all call centers0there are plenty o( tried and true strategies that will greatly enhance the chances o(retaining your agents and ensuring they per(or+ at their est. &o+e o( the +ost co++onareas o( (ocus include;

I+prove hiring and o (it. )iring candidates ased on the right o :uali(ications andehavioral co+petencies will i+prove your chances (or a etter o (it. I( turnover rates

are high0 revisiting the hiring process should e the (irst step in i+proving retention.

I+prove co+petitive pay and ene(its. %nsure that os in the call center are internallyand eternally e:uitale. %ven i( youre udgets are tight0 dont count this strategy out 9 it+ight e +ore practical and less epensive than +eets the eye i( youve really analyzedand identi(ied the true costs o( turnover.

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%nsure that agents receive ti+ely coaching and (eedac. %ncouraging the positiveaspects o( the agents per(or+ance0 +odeling desired actionsOehaviors and woring withthe+ to create (easile action plans that will enale the+ to achieve oectives areessential steps.

Brovide opportunities (or ongoing sill and career develop+ent. "gents who see theirposition as dyna+ic and evolving are +ore liely to re+ain co++itted to the call center.Create a sills9ased pay progra+ and0 i( possile0 a co+pelling career path in the callcenter to encourage agents to continually epand their nowledge and capailities.

Brovide as +uch (leiility in wor schedules as possile. Call center scheduling taescreativity and co++unication since oth worload re:uire+ents and agent re:uire+ents+ust e acco++odated as +uch as possile.

I+prove supervisor training. Its o(ten said that agents dont leave co+panies 9 they leavetheir supervisors. #aing steps to ensure that your supervisors have the sills andnowledge necessary to e the est +anagers possile can i+prove retentiondra+atically.

Brovide recognition. "ccording to +uch o( the research on turnover0 ust saying thans(or a o well done goes a long way towards o satis(action. #his can e (or+al0 e.g.0

through newsletters and announce+ents0 and in(or+al through everyday conversations.

#hese suggestions represent the proverial tip o( the iceerg. >ther strategies can range(ro+ i+ple+enting a teleco++uting progra+0 to estalishing a +entoring progra+0designing etter incentive plans and i+proving (acilities design.

9INDIN( TH) RI(HT /A5ANC)

" certain a+ount o( turnover is inevitale and acceptale 9 your challenge is to deter+ineust what that acceptale level is. #o do so0 its i+portant to understand the (ull cost o(turnover and co+pare it to the costs associated with sta(( retention progra+s. #he ey is

to (ind the right alance; you dont want to spend +ore +oney retaining sta(( than it coststo replace the+0 ut you also dont want to spend +ore +oney replacing sta(( than it coststo eep the+.

"+ong the practical criteria to consider when seeing the right alance are;

#he +ai+u+ a+ount the co+pany is willing to pay (or these positions.

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"vailaility o( a silled laor pool to (ill agent vacancies.

#he cost @+oney and ti+eA o( e((ectively training new9hires.

#he relative costs o( lower :uality and productivity when turnover increases.

>rganizational values and culture. In su+0 there is +uch that can e done to

address turnover and i+prove retention. Dont leave it to chance.

Challenges for HR managers

#he I# enaled services @I#%&A industry is eing looed upon as the net ige+ploy+ent generator @8assco+ predicts 1.1 +illion o re:uire+ent y the year2-A. It is however no easy tas (or an )* +anager in this sector to ridge the everincreasing de+and and supply gap o( pro(essionals. nlie his so(tware industrycounterpart0 the I#%& )* +anager is not only re:uired to (ul(il this responsiility0 utalso (ind the right ind o( people who can eep pace with the uni:ue wor patterns in thisindustry.

"dding to this is the issue o( +aintaining consistency in per(or+anceand eeping the +otivation levels high0 despite the +onotonous wor. #he toughestconcern (or an )* +anager is however the high attrition rate.In India0 the average attrition rate in the I#%& sector is approi+ately 3935percent. It is true that this is (ar less than the prevalent attrition rate in the & +aret@around 7 percentA0 ut the challenge continues to e greater considering the recentgrowth o( the industry @read the less ti+e spanA in the country. #he & I#%& sector isesti+ated to e so+ewhere around three decades old. "ccording to Eaihav0 assistant+anager9)*0 I#$#0 eeping low attrition levels is a +aor challenge as the de+andoutstrips the supply o( good agents y a ig +argin. urther0 the salary growth plan (oreach e+ployee is not well de(ined. "ll this only encourages poaching y other co+panieswho can o((er a higher salary. #he +uch hyped Lwor (or (unM tag nor+ally associatedwith the industry has in (act ac(ired0 as +any individuals @+ostly (resh graduatesA0 taeit as a pas9ti+e o. >nce they oin the sector and understand its re:uire+ents0 they aretaen aac y the long woring hours and later +onotony o( the o starts setting in.#his is the reason (or the high attrition rate as +any individuals are not ale to tae thepressures o( wor. "ccording to +esh Eyas0 vice president and senior consultant0 head9I#%&0 J"I India0 the reason ehind this is the Lgla+our and (un co+ponentM0 which is

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high in co++unication to prospective e+ployees. #he toughness o( the o and ti+ings isnot ade:uately conveyed. esides the induction and proect training0 not +uchinvest+ent has een done to evolve a Lcontinuous training progra++eM (or the agents.


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#ransWors In(or+ation &ervices0 adds that the )* needs to e vigilant aout s+allthings lie (ood0 transport (acilities0 wor environ+ent0 (acility layout0 a+enities andconvenience support to the e+ployees. LCosts to tae care o( these things should taeprecedence over other epenses (or )*. #he )* strategy +ust have at its centre o( (ocus

people needs and re:uire+ents. It +ust also uild in the (leiility net to adust to asudden de+and (ro+ e+ployees or (or e+ployees0M he says.

"ll this has induced the co+panies to tae necessary steps0 oth internally andeternally. Internally +ost )* +anagers are usy putting in e((orts on thedevelop+ent o( their e+ployees0 uilding innovative retention and +otivationalsche+es @which was +ore +oney oriented so (arA and +aing the environ+ent livelier.

>utside0 the (ocus is on creating awareness through se+inars and going to ca+puses (orrecruit+ent. #hough the industry has taen a lot o( initiative in conducting training (ornew entrants and agents0 it is develop+ent o( the sills o(+iddle +anage+ent @co+prising o( the tea+ leaders and supervisorsA0 which needs to etaen care o(. Due to the vertical +ove+ent in the industry0 +ost individuals getpro+oted a ran or two aove their current position. )owever0 since they do not have any+anage+ent acground0 things start eco+ing di((icult (or the+ @considering +ost whooin the industry areust graduatesA. "ll this not only a((ects the scale0 service and :ualityo( the co+pany0 ut also on the personality o( the individual who (eels at loss. "ccordingto +ost industry eperts0 with technologies0 techni:ues0 processes and +ethodologieseingrede(ined and reinvented y the day0 the contact centre +anager needs to constantlyhandle changes in +anage+ent philosophy and operational practice to success(ully andconsistently deliver custo+er goals.

#he I#%& co+panies are conse:uently now usy designing develop+entinitiatives (or their e+ployees. Hi+aye says0 LWe try helping people identi(y theirstrengths and weanesses0 pic up their prole+9solving sills and their leadershipailities. #his eing a people9driven usiness0 the e+phasis is +ore on i+proving theirpersonalities and processes and help each individual e+erge as a winner.M )e points outthat )* +anagers need to eep in +ind that one shoe does not (it all and each individualhas di((erent capailities. &o0 in spite o( the vertical +ove+ent in this industry0 )*+anagers should try developing horizontal career options0 which will only help inenhancing an individual?s personality and strengths. #hese options areNgrowth contentspecialists0 trainers0 :uality eperts or even help in operational and usiness develop+ento( the organisation. In spite o( so +any initiatives0 industry eperts (eel that the +aorconcern is that noody has really taen it as a Lcareer choiceM ut a Lpass9ti+eM or Lti+e9

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gap e+ploy+entM. I( a +ature industry has to evolve0 the picture needs to e changedwherein it eco+es LtheM choice industry lie its so(tware counterpart.

"lready grappling with a 3 per cent attrition rate @the highest in the "sia9Baci(ic region0co+pared to China at 1915 per centA0 the industry is epected to have a +anpowershortage o( 20'20 in 2-. In a country where 3 +illion graduate every year0 the tasis daunting.

)* consultants say one o( the ey gaps eing (aced y the industry is the low level o(epertise at (rontline @lower9+iddleA +anage+ent0 in +anaging and sustaining an I#%&9B> operation.

#he ineperienced +iddle and (rontline +anage+ent is one o( the ey causes o( attrition."nother disturing data is that nearly 5 per cent o( those who :uit leave the industry.

&o whats the way out! irst0 the industry has to get out o( its i+age o( an Internetsweatshop where an e+ployee is resigned to his (ate o( eing in o((ice at ungodly hours(or a dead9end o.

Co+panies which have not een ale to tacle this i+age could tae a cue (ro+ ICICI>ne&ource0 which gives e+ployees who have een with the co+pany (or +ore than 1-+onths an option to switch to positions in other ICICI group co+panies.

#he syste+ wors as a ig assurance (or B> e+ployees that the sills they have learntsuch as custo+er (riendliness and rapid response to custo+er prole+s have widerapplications and +aret de+and.

>ver the last si years o( woring with the I# industry in consulting assign+ents0 I havewondered whether there is a way o( reducing the signi(icant attrition o( hu+an resources(ro+ an organisation! What are the causes (or people leaving an I# co+pany +uch (asterthan any other conventional industry0 at the nowledge worer level!

Curt Co((+an $


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#here was a ti+e when providing good woring conditions0 aove par pay and pers

could +otivate people to stay and per(or+. With the (ace o( usiness changing andnowledge worers increasing in proportion in al+ost all organisations0 the (actors thatcurrently attract and retain people are opportunities to learn and grow

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"n organisation0 y (ocusing on the aove0 can save up to 25 percent o( its annualrevenues0 which it loses as a result o( attrition.

5eadership crisis

Who then0 in an organisation0 is the custodian o( an e+ployee?s co++it+ent9to9cause!

Without a second thought you can conclude that it is the i++ediate +anager o( ane+ployee who can +ost in(luence this (actor and that is where crisis o( leadership ishurting I# organisations the +ost0 in ter+s o( leeding intellectual capital. Is there a wayout o( this!

In the (ast9paced I# wor environ+ent0 there is very li+ited ti+e and +indshare devotedy a +anager to his tea+ +e+er?s personal develop+ent and therey he is notin(luencing the e+ployee?s perception o( growth.

I have also oserved that the ey reasons (or +any e+ployees o( I# organisations to e inthe industry is (or etter pay and woring conditions co+pared to other conventional

industries. #here(ore0 they don?t co+e in with very good talent align+ent with the rolesthey play in the I# industry. In other words0 this is not their real choice o( wor. #hetypical I# +anager is not woring ade:uately on aligning his tea+ +e+ers to roleswhich use their natural talents e((ectively. #oday?s I# +anager lacs oth the ti+e andtools needed (or +aing this assess+ent and corrective action.

eing too logical and tas driven0 pushed y deadlines0 the typical I# +anager is unaleto cope up with the (leiility in leadership styles re:uired0 ased on his tea+ +e+ers?+aturity levels and the situation. #he result is0 he stics to what ever is his naturalleadership style.


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#his is i+portant considering the (act that the cost o( attrition in the industry is 1.5 ti+esthe annual salary.

B>s have also started +oving up the value chain 99 a pri+ary reason why the industryneeds to put its act together to +eet the co+ing crisis (or trained +anpower.

or ea+ple0 the epectation is that y 270 the industry de+and (or Kava pro(essionalsalone will touch three +illion.

>n its part0 8assco+ is doing what it can y eploring the concept o( a national sillsregistry o( I# e+ployees0 which will operate on a shared services +odel and will ead+inistered y a credile third party.

#he industry ody is also co+ing out with an assess+ent and certi(ication progra++e tocreate an e+ployale talent pool with ench+ared9re:uisite sills and will shortlyunveil an assess+ent and certi(ication (or (rontline +anage+ent.

" 8assco+9FB


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1. )iring or *ecruit+ent Costs; Costs o( advertise+ent0 agency costs0 e+ployee re(erralcosts0 internet posting costs0 etc.

2. #raining Costs; Induction progra+ costs0 lodging costs during that period0 orientation+aterial costs and cost o( person who conducts orientation.

3. How Broductivity Costs; "s new e+ployee is learning new o0 co+pany policies0 etc.0they are not (ully productive.

4. 8ew )iring Costs; Cost o( ringing new person aoard0 ti+e taen in understandingthe o o( the e+ployee who le(t and other pers given.

5. How &ales Cost; %perience and the contacts that were lost0 ti+e (or which the positionwas vacant and other such things which result in either loss o( custo+ers or lower sales.

What all this +eans is that there are huge costs associated with an e+ployee leaving. I(

we can roughly ter+ this in +onetary ter+0 it +eans that (or one person leaving aco+pany0 the cost can e close to *s. '0 or approi+ately e:ual to 2 +onths salary.or a 39seater call9center with an attrition rate o( 3Q0 it can e as large as *s. ' lahper annu+.

)ow is "ttrition a((ecting the sector!

I( a person leaves a(ter the training it costs the co+pany aout *s '0. or a 39seater call centre (acing the nor+al 3 percent attrition0 this translates into *s ' lah perannu+.


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right candidate/ and uilding a /conducive wor environ+ent/0 which will e ene(icial(or the organization. #he need is (or those individuals who can +ae a career out o( this.

"ll this has induced the co+panies to tae necessary steps0 oth internally and eternally.

Internally +ost )* +anagers are usy putting in e((orts on the develop+ent o( theire+ployees0 uilding innovative retention and +otivational sche+es @which was +ore+oney oriented so (arA and +aing the environ+ent livelier. >utside0 the (ocus is oncreating awareness through se+inars and going to ca+puses (or recruit+ent.

elow the sur(ace999W)G I& "##*I#I>8 "


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rewardsust nothing is woring.

e(ore proceeding (urther0 lets see why people are leaving! Why there is high attritionrate.

Why people are +oving!

When there are so +any ene(its associated with B> industry. when there are so+any privileges (or the B> e+ployees than what +aes the+ to change theco+panyOindustry!! Is it only 8%G that +atters or anything else as well!! "(tertaing eit9interviews and analyzing the trend I a+ ale to list out (ollowing reasons (or aB> pro(essional to change hisOher o.

8o growth opportunityOlac o( pro+otion

or higher &alary

or )igher education


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spouse o( +ale e+ployees. "ll e+ployees and their dependent (a+ily +e+ersare eligile. Dependent (a+ily +e+ers include spouse0 non9earning parents andchildren aove three +onths

2. Bersonal "ccident Insurance &che+e; #his sche+e is to provide ade:uate

insurance coverage (or )ospitalization epenses arising out o( inuries sustainedin an accident. #his covers total O partial disale+ent O death due to accident anddue to accidents.

3. &usidized ood and #ransportation; #he organizations provide transportation(acility to all the e+ployees (ro+ ho+e till o((ice at susidized rates. #he lunchprovided is also susidized.

4. Co+pany Heased "cco++odation; &o+e o( the co+panies provides sharedacco++odation (or all the out station e+ployees0 in (act so+e o( the B>co+panies also undertaes to pay electricityOwater ills as well as the &ocietycharges (or the shared acco++odation. #he purpose is to provide to thee+ployees to lead a +ore co+(ortale wor li(e alance.

5. *ecreation0 Ca(eteria0 "#< and Concierge (acilities; #he recreation (acilitiesinclude pool tales0 chess tales and co((ee ars. Co+panies also have welle:uipped gy+s0 personal trainers and showers at (acilities.

'. Corporate Credit Card; #he +ain purpose o( the corporate credit card is enalethe ti+ely and e((icient pay+ent o( o((icial epenses which the e+ployeesundertae (or purposes such as travel related epenses lie )otel ills0 "ir ticetsetc

7. Cellular Bhone O Haptop; Cellular phone and O or Haptop are provided to thee+ployees on the asis o( usiness need. #he e+ployee is responsile (or the+aintenance and sa(eguarding o( the asset.

-. Bersonal )ealth Care @*egular +edical chec9upsA; &o+e o( the B>& providesthe (acility (or etensive health chec9up. or e+ployees with aove 4 years o(age0 the +edical chec9up can e done once a year.

,. Hoans; co+panies provide loan (acility on three di((erent occasions;%+ployees are provided with (inancial assistance in case o( a +edical e+ergency.

%+ployees are also provided with (inancial assistance at the ti+e o( theirwedding. "nd0 #he new recruits are provided with interest (ree loans to assistthe+ in their initial settle+ent at the wor location.

1. %ducational ene(its; co+panies have this policy to develop thepersonality and nowledge level o( their e+ployees and hence rei+urses theepenses incurred towards tuition (ees0 ea+ination (ees0 and purchase o( oossuect0 (or pursuing


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#o hold onto your people0 you have to wor counter to prevailing trends causing the ochurning. &+art e+ployers +ae it a strategic initiative to understand what their peoplewant and need 99 then give it to the+.

Retention .trategies

#his is not an ehaustive list0 one can add or delete any o( the elow +entionedstrategies. &econdly0 the need o( the hour is to have /right asics/. %very individual isdi((erent0 his needs are di((erent0 and his e+otions0 his prole+s are di((erent. &o0 dear)*9Bro(essionalssit down and concentrate on your asics. I have classi(ied retentionstrategies into two parts;


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Co++unication is the (irst step toward creating the ind o( environ+ent thatpeople care aout0 and i( they care0 they ust +ay stay. I+ not taling aout a loto( 8ew "ge stroing designed to ring out the inner person or (alse praise thatcreates a +isplaced sense o( security. Instead0 eep your people in the loop aoutwhats happening with the co+pany. "t any ti+e0 all o( your e+ployees should

have a pretty good idea o( how usiness has een0 and they should e aware o(what issues the co+pany is atte+pting to address.

#hat +eans that you regularly eep your people up to date with i+portant eventsa((ecting the co+pany. I( 8ove+er was good0 let the+ now0 and while youre atit0 tell the+ what you epect to happen in Dece+er. &hare good news0 as well aspoints o( concern. I( youve got /issues0/ tal aout the+ e(ore they start +aingyou crazy. "nd i( they dont get resolved0 (igure out whether the prole+ ste+s(ro+ a couple o( individuals or (ro+ your syste+.

2. #he point here is that you want to treat these people as your partners0 which theyare. #hey +ay not have to worry aout covering the payroll this wee0 ut they dohave worries o( their own. #reat the+ with at least as +uch respect as they giveyou. "s the stores owner or +anager0 you set the tone (or the entire organization.I( your salespeople0 (or instance0 enoy their encounters with you0 they are +uch+ore liely to greet custo+ers with a positive attitude. #hey are also +uch +oreliely to enoy their wor when they dont have a (ire9reathing dragon looing tosinge their utts.

3. Histen to your e+ployees when they have ideas (or i+prove+ent. "gain0 theene(its etend eyond ust +aing people (eel appreciated (or theircontriutions. #hese are0 a(ter all0 the people who do the wor every day. #hey+ay have so+e ideas to i+prove productivity0 and when they do co+e up withone0 let everyody now where it ca+e (ro+. Bost a /rag oard/ in your rearoo+0 or circulate an internal newsletter that touts these contriutions. #he pay9o(( is a contagious (eeling o( pride and0 perhaps0 so+e new e((iciency that savesthe co+pany +oney.

4. &et Clear %pectationso )ow o(ten do you appraise your e+ployeesOtea+9+e+ers!

o What are your epectations (ro+ your e+ployeesOtea+9+e+ers! What

are the para+eters to +easure their per(or+ance! )ave youco++unicated to the+!

o What will e the conse:uences0 i( they (ail!

o What will e the rewards0 i( they eceed the epected level!

I( you are not having any epectations0 how you are going to appraise0 youre+ployees! Ges0 you are going to e iased0 ecause you dont have set standards.

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#he role o( a C%>0 )*


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plan (or a depart+ent or division is a worthy activity0 it does not represent anoutco+e. In the activities trap0 developing a plan is the goal0 rather thanincreasing your +aret share.

Rele#ance. #he principle o( relevance helps de(ine the /why/ o( the assign+ent.

I( your e+ployees have a (ull understanding o( the proects i+portance0 they can+ae adust+ents as unanticipated (actors crop up within the process. #heyproaly also will e +ore co++itted to the result ecause they can see +oreeasily how it (its into the ig picture and how their e((orts i+pact the co+pany.

#his understanding typically is acco+plished through dialogue etween the+anager and suordinate0 which allows (or a +ore thorough review o( thesituation and (or (eedac and discussion. #his process uilds good will with thee+ployee and sets the stage (or additional responsiilities.

.implicity. &i+plicity creates a sense o( grounding (or e+ployees as theyendeavor to carry out assign+ents. I( +anagers identi(y the wor in si+ple0straight(orward ter+s0 e+ployees will (ind it +uch easier to (ollow through on+anagers wishes. #o acco+plish this0 a +anager +ust identi(y the ey +essagein a (ashion that the e+ployee can e+race.

5. Broper *ewarding

" research reports says that in todays scenario0

o 7Q o( your e+ployees are less +otivated today than they used to e.

o -Q o( your e+ployees could per(or+ signi(icantly etter i( they wanted

to.o 5Q o( your e+ployees only put enough e((ort into their wor to eep

their o.

"s you +ight e aware o( %+ployee *eward covers how people are rewarded inaccordance with their value to an organization. It is aout oth (inancial and non9(inancial rewards and e+races the strategies0 policies0 structures and processesused to develop and +aintain reward syste+s. #he ways in which people arevalued can +ae a considerale i+pact on the e((ectiveness o( the organization0and is at the heart o( the e+ploy+ent relationship.

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#he ai+ o( e+ployee reward policies and practices0 i( any in your organization isto help attract0 retain and +otivate high9:uality people. etting it wrong can havea signi(icant negative e((ect on the +otivation0 co++it+ent and +orale o(e+ployees. Bersonnel and develop+ent pro(essionals will e involved (re:uentlyin reward issues0 whether they are generalists or specialize in people resourcing0

learning and develop+ent or e+ployee relations. Feep (ollowing para+eters in+ind0 while designing a reward policy;

uild a high degree o( recognition value into every reward you o((er.

*ecognition is the +ost cost9e((ective +otivator there is. While the high cost o(other rewards (orces us to give the+ sparingly0 recognition can e given any ti+e0at very little cost.

&o+e very ordinary ite+s and events can e i+ued with etraordinary+otivational signi(icance0 (ar in ecess o( their +onetary value. I a+ constantlya+azed at how +otivating a pizza or +ovie ticets can e i( is given withsu((icient appreciation. " sincere than you can e delivered at any place and atany ti+e0 costs asolutely nothing and can e +ore +otivationally power(ul thana sustantial +onetary onus. >rganizations can provide innovative recognition inan in(inite nu+er o( ways.

or ea+ple0 @" )ypothetical IncidentA a s+all +anu(acturing co+pany +ade itse+ployees (eel lie heroes when they attained a +aor sa(ety +ilestone 9 1 dayswithout a single accident. >n the +orning o( day 10 it was announced that acatered lunch would e served the net day0 i( they +ade it to the 5;3 shi(twithout an accident. "t 5;15 anticipating was uilding.


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Clearly the traditional /pay (or loyalty/ syste+s in +ost organizations need to echanged. Dont let attendance e your +aor criterion (or rewards.


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progra+s pay e+ployees +onthly0 rather than :uarterly or annually as in the past.

#here is a well9accepted law o( ehavioral psychology0 that i( you want so+eoneto repeat a ehavior0 you should positively recognize it i++ediately. ro+ thislaw0 s+art supervisors and +anagers can learn a vital lesson; Hoo (or anye+ployee doing so+ething right0 right now0 and recognizes it." support to this0 here is +y (avorite reward story;

/When a senior +anager in one organization was trying to (igure out a way torecognize an e+ployee who had ust done a great o0 he spontaneously piced upa anana @which his wi(e had paced in his lunchA0 and handed it to the astonishede+ployee with hearty congratulations. 8ow0 one o( the highest honors in that

co+pany has een dued the /olden anana "ward/./

ive e+ployees a choice o( rewards. *ewards are as di((erent as the people whoreceive the+ and it doesnt +ae sense to give rewards that recipients dont (indrewarding. or ea+ple0 so+e people pre(er +ore pay0 while others pre(er +oreti+e o((. " pro+otion +ight e +ore rewarding to one person0 while a o9sharing arrange+ent +ight e +ore rewarding (or another. &o+e people areecited aout sports events0 others aout +ovies. &o+e e+ployees would love adinner in a ro+antic restaurant0 others a oo y their (avorite author. ood0 (un0education0 i+proved wor environ+ent0 gi(ts0 travel0 (a+ily9oriented activities 9the options are endless.

)ow do you now what will e rewarding to e+ployees! "s the+. &+artorganizations are also letting e+ployees choose their own rewards (ro+ reward+enus and catalogs. Bersonalizing rewards shows that a co+pany cares enough todiscover what /interests/ each e+ployee0 rather than ust distriuting genericite+s. It also reduces the (ollowing danger; In one organization I was visiting0 ane+ployee opened a ig drawer in his des and disdain(ully showed +e all the/worthless trinets/ he had collected over the years.

Increase the longevity o( your rewards. #his can e done in a nu+er o( ways;>ne o( the eys to reward longevity is sy+olis+. #he +ore sy+olic an ite+ iso( the acco+plish+ent0 the +ore liely it is to continue re+inding the e+ployeeo( why it was given. or instance0 a #9shirt o( co((ee +ug with a +eaning(ulinscription will continue rewarding those who wear it0 or use it0 long a(ter itsinitial receipt. #here are +any toens o( appreciation I still eep on or near +ydes that re+ind +e o( the oy o( past acco+plish+ents0 while the +onetaryrewards I have received are long spent and long (orgotten.

"nother way to increase the longevity o( rewards in your organization is y using

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so+e ind o( point syste+. *ather than rewarding each individual ehavior oracco+plish+ent0 points can e awarded0 which e+ployees can accu+ulate andeventually trade (or ite+s (ro+ a reward +enu or gi(t catalog. #his eeps theanticipation o( rewards (resh (or longer periods o( ti+e. It also addresses the need(or reward individualization.

>ne co+pany that designs +otivational syste+s o((ers an electronic deit9cardsyste+ to help larger clients cope with the co+pleity o( distriuting0 tracingand redee+ing e+ployees points. %+ployees can use their points to purchasevirtually anything they want0 (ro+ sports e:uip+ent and clothing to auto+oilesand overseas vacations. #hey only caveat (or such progra+s is to +ae sure thatthe recognition value o( the rewards isnt lost ecause o( the i+personal nature o(the technology.

>ne co+pany uses a ga+e it Call &a(ety ingo. "ll e+ployees receive a weelyingo card. When an e+ployee is oserved woring sa(ely0 a nu+er is presented

@i++ediate recognitionA. When they get /ingo/0 they receive a sa(ety acet@along with appropriate veral rein(orce+entA. #he rewards escalate (orsuse:uent wins. #his type o( progra+ eeps e+ployees interested (or longperiods o( ti+e0 even though there +ight e wees or +onths etween rewards0and +aes routine wor +ore (un overall.

Interestingly0 when researchers have investigated the +otivational dyna+ics o(these worplace ga+es0 they have (ound that the +aor +otivator is the playing0not the prize.

e continually vigilant o( de+otivators that +ay under+ine your organizationsest e((orts to provide power rewards0 and reduce the+ pro+ptly.

ne de+otivator that is proaly ende+ic inany reward syste+ +odi(ication @especially as an organization +oves (ro+entitle+ents to +ore per(or+ance9ased rewardsA is a sense that so+ething iseing taen away. %+ployees need to e educated aout the reasons that this iseing done0 understand the ulti+ate ene(its to the+ and the organization0 andshould proaly have so+e input into the change process.

#o avoid the perception o( un(airness0 it is i+portant0 (irst and (ore+ost0 that theprocess (or allocating rewards is viewed y e+ployees as eing i+partial. #hisre:uires an oective +easure+ent syste+ that (ew organizations have. Without

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a dout6 the +orale o( several other e+ployees will e a((ected.

5. or ea+ple0 you have a sta(( person who views her role as i+portant and

she rings ten years o( eperience0 an


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traditional selection processes was either a poor response or a +is+atch etweenco+pany goals and individuals epectations...

Co+pensation and *ewardsIncentives to e+ployees play a vital role in +otivating and retaining the+ in the

organization. Co+pensation and rewards in the I# industry have long included a asicpay co+ponent along with a onus pay when the co+pany +ade higher pro(its. Hater(ir+s initiated per(or+ance ased pay that rewarded the e+ployee ased on hiscontriution to the overall co+pany pro(its...

>rganization Culture&tudies and surveys analyzing the psyche o( the e+ployee have (ound that the worenviron+ent has a +aor i+pact on the ehavior o( an e+ployee. "n e((ective retentionstrategy would involve acnowledging the e+ployee as the internal custo+er andaligning the organizational strategies with e+ployee needs and wants...

Wor9Hi(e alance%+ployees di((erentiate a good e+ployer (ro+ any other e+ployer through the (eeling o(Twelleing that is generated at the worplace. " alance etween wor and the personalgoals and wants o( an e+ployee contriutes positively to the retention o( e+ployees...

Hearning $ rowth#he dyna+ic nature o( technology re:uires the I# industry to upgrade its operations(re:uently. &o0 another way to retain e+ployees is to help the+ update their nowledge(ro+ ti+e to ti+e through training progra+s...

Headership

&urveys also identi(ied poor leadership as one o( the reasons (or e+ployee attrition. Itwas oserved that leaders incapale o( +otivating and guiding e+ployees pushede+ployees to change os (re:uently. Wipro initiated the TWipro Headers Jualities&urvey in 1,,2...

Conclusion

#he usiness process outsourcing @B>A industry in the country which is epected toe+ploy around one +illion people y 2- is (acing the challenge o( (inding :uality

hu+an resources given the current attrition rate o( around 5 percent.

"nalysts say attrition rates vary y 2Q94Q in so+e (ir+s0 while the top ones averagesat least 15Q. 8assco+ in a report said the outsourcing industry was epected to (ace ashortage o( 2'20 pro(essionals y 212.

#he size o( the Indian B> +aret is liely to e around P,912 illion y 2' and wille+ploy around 40 people0 IC*" said in its Indian B> industry report.

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"ccording to eperts0 the cost o( attrition is 1.5 ti+es the annual salary. "ge should note a arrier (or training e+ployees and could in (act ring in +ore staility to theco+pany.

Documents

File on Attrition