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All materials are Copyrighted 2010 by Strategic Human Resources Management India, Pvt. Ltd. or Society for Human
Resource Management unless otherwise expressly noted. All rights expressly reserved.
Webinar on Employee Retention – Measures & Strategies
29th March, 2012
Structure
1. Mathew Kuruvilla
-- Understanding Employee Turnover in India
-- Retention : A “Systemic” Solution
2. Mervyn Raphael
-- Real time challenges in Employee Retention
-- Some best and next practices in Employee
Retention
-- How to evaluate retention program effectiveness?
3. Question & Answer
Slide 2
What are organizations grappling with?
“Double digit attrition rates hurting
Indian businesses….attrition costs
three to four times of an individual’s
salary.” - Bruce M Stewart, Deloitte Global Services Line
Leader
“Indian ITES firms tackle
attrition >35% on an annual
basis…” - The Economic Times August 2011
“India and China are regarded as the
future…consequently, multinationals
are scouring these countries for local
talent.” - The Global Talent Index Report,: Outlook to 2015,
The Economist & Heidrick & Struggles
“56% of employees in
India believe they must leave their
organization to advance to a better
job. Comparative figures: US 43%
U K 41%China 38 %…” - Towers Watson’s Global Workforce Study 2010
Slide 3
No Labor
Shortage
Emerging
Shortage
Labor Market
Under Pressure
Workforce
Specifications
• No labor shortage
• Low mobility
• Tenured
• Preference for public
service
• Increasing labor mobility
• Increasing recruitment cost
• Shorter tenures
• No-poach agreements
• Shrinkage of labor pools
• Over dependence on colleges
as labor pipelines
• Ability to negotiate opportunities
• Volatile talent - constantly on the
lookout - devoid of career focus
Retention
Drivers
• Recruitment key
• Lower turnover preferred
• Equity key driver for
employee satisfaction
• Lifetime loyalty factor
• Retention business case driven by
productivity & Opportunity costs
• Efforts to communicate value
• Beginnings of focus on top
performer identification & retention
• Line Managers willing to pitch in
• Extending tenure vs
lifetime loyalty
• Focus on employee engagement
• Reduce opportunity losses and
replacement costs
Staffing
Challenge
• Limited Talent Pool
• Stagnating labor pools &
markets
• Tolerance for mediocrity
• Low trust levels between
employer & employee
• Staffing an operational priority
• Turnover starts challenging stability
• Wage inflation begins
• Workforce quality starts suffering
• Quality leadership & Managerial
talent shortage
• Depleting organizational
knowledge
• Near fit capabilities
Indian labor dynamics Retention not
a key HR
priority Economic
Reforms
Rise of the New Economy
Businesses
Focus shifts to
Retention
Retention
Embedded in
HR Strategy
Slide 4
Getting the basics right – employee engagement & organization performance
Organization Performance
Discretionary Effort
Desire to Stay
Employee Engagement
Slide 5
Top turnover drivers in India* •
• Job Characteristics
• Leadership quality & poor people
management
• Total Compensation not competitive
• Work environment & work-life balance
• Inadequate career advancement
opportunities
• Inadequate personal development
opportunities
• Relationships at the workplace
• Individual characteristics
Bottom-line:
• Poor Alignment of employee with job
• Dissatisfaction with the opportunities &
practices adopted by the organization
* Source: research reports from Towers Watson, Corporate Executive
Board, Heidrick & Struggles
Slide 6
Sharper Diagnosis Needed
Employee Focus
• Performance turnover – top 25%
• Top talent attrition
• Turnover of low performers
Organization Focus
• Benchmarking employee value proposition
• Hard to hire positions
• Key skills
• Organization design & structure assessments
• Employee surveys, pulse surveys, focus group etc.
External Focus
• Attrition to direct competition
• External factor analysis
• Benchmarking HR products & practices
• Industry trends or regulatory changes
• Post Exit Surveys
• Employee relations audit
• Manager sensing data based on
defection risk
Slide 7
Most appreciated elements of EVP*
Working for respectable organization/ organization stability
Type of work/Job interest
alignments
Training/ development opportunities
Base Pay/ compensation
Career advancement/ opportunities
Bonus or
other incentive
*Based on three different Studies by Mercer, Towers Watson &
Corporate Executive Board on Employee Value Proposition (2011).
Flexible schedule/ vacation/holiday/
paid time off
Are Employers aligned to the
employee view of the value
proposition … does it remain
compelling?
Slide 8
Integrated Retention
Strategy
Recruitment
Benchmarked Total
Compensation Practices
Career Advancement
& Personal Development
Leadership/ High Quality
People Management
Practices Robust
Performance, Talent &
Succession Management
Work-life Balance
Workforce Planning & Role/Job
Alignment
Culture & Relationships
Embed retention into
business strategy & Manager outcomes
Assess levers for inter -
linkages & relative impact
Focus on organization
culture & assimilation of
HR practices
Employee Value Proposition – an Integrated Retention Strategy
Sharp focus on future career opportunities, compensation, Devpt
opportunities, job alignment
Slide 9
Executing a “Systemic” Solution
Diagnose
Design
Implement
Assess
Sustain
Assess Measures
Sustain
Design & Implement
Assess Levers
Prioritize
Diagnose
Slide 10
Watch out for Line Manager response to your proposals !!
Slide 11
Structure
1. Mathew Kuruvilla
-- Understanding Employee Turnover in India
-- Retention : A “Systemic” Solution
2. Mervyn Raphael
-- Real time challenges in Employee Retention
-- Some best and next practices in Employee
Retention
-- How to evaluate retention program effectiveness?
3. Question & Answer
Slide 12
Retention Is Not For Everyone
Source: Dibble, Suzanne. (1999). Keeping your valuable employees—Retention strategies for your organization’s most important resource. New York: John Wiley and Sons. Inc.
The challenges that confront managers are not only how to minimize the
possibility of losing good employees, but also how to identify the employees an
organization needs and wants to keep.
Slide 13
Current Challenges
Individual Imperatives
• Career growth increasingly about variety of exposure: cross-function, cross-industry, cross-geography
• Increased connectivity leads to employer consideration set becoming more global
• Generational shifts leading to shorter time horizons for “staying” in an organization – organizational “loyalty” getting redefined
• Peer comparisons becoming more of an influencer due to increased connectivity on various social platforms, employees constantly looking for “greener pastures”
• Emphasis on work-life balance, in contrast to organizational requirements – mismatch of career anchor with organization/role
Organizational and Industry Imperatives
• Accelerated growth of people managers to senior management, due to exponential growth of some sectors
• Organizations in the same domain are scrambling for the same talent, with no perceptible differentiation
• Dilution of ethical hiring practices, due to the need to “make the numbers”
• Acknowledging and actioning on the critical role of the manager in retention
Slide 14
Retention Practices
Rewards (Monetary)
Non – reward programs Individual Level
Organizational Level
Culture
Policies & Procedures
Long term interventions
Slide 15
Retention Practices at Individual Level
Rewards
Employee of the Month
Spot Recognition
Recognition Leaves
Lunches/dinners with the
leadership
Stretch assignments for
high potentials
Employee Engagement
initiatives
Building managerial
capability for handling
people
Bonus
Performance based
incentives and
increments
Long term rewards like
ESOPs
Continuing Education
program
Deferred Compensation
Retention Bonus
Profit sharing
Sabbaticals
Paid vacations with families
Individual career growth
Variety of career options
across functions and
geography
"WOW Hours" (time off
awarded to employees who
go above and beyond)
Non – Reward Programs
Slide 16
Retention Practices at Organizational Level
Culture
Implementing a unique
Employer Value
Proposition
Clear Brand signature
practices
Telecommuting
Building practices
around employee needs
Employees-only online
networks
Fun @ Work: Recognize
birthdays/anniversaries/
retirements/promotions
Policies & Procedures
Empowered Teams
Culture of ownership –
Feeling of “My own
company”
Building a culture of trust,
transparency, and
openness
Continuous feedback to
and from employees
Autonomy and freedom
Being socially
responsible - engaging
in community efforts
Involving people in planning
and taking decisions
Flatter structures – leading to
faster communication and
quicker decision making
Career Lattices for improved
employee development
Customized career path
based on employee life
stages
Long Term Interventions
Slide 17
Some Examples Unlimited tuition
reimbursements for job related educational expense Introduced new global
women’s theme - Defining success. Your way Social Security systems for all its employees
Rigorous leadership development program for senior managers Deferred Compensation program for young leaders
Active contribution to community – social responsibility is one of their core values
Pay Exception: Allowing manager to give pay increases beyond normal policies
"Rotating Officer Program,“ where every bank sits on board meetings CEO has lunch with his employees on most days
Customized career options for employees based on their career stages Now follows a continuous process of appraisal rather than a yearly
process Every employee to be moved to a different role/function/ geography every 2-3 years
Slide 18
Slide 19
References High attrition rate hurting India: Deloitte; Rediff.com, May 3, 2011.
Attracting & Retaining Critical Talent Segments: Identifying Drivers of Attraction and
Commitment in the Global Labor Market; Corporate Executive Board, 2006.
Inside Employee’s Mind : Navigating the New Rules of Engagement, Mercer, 2011.
Towards a Sustainable Rewards and Talent Management Model, Key Insights from
Towers Watson’s Global Talent Management and rewards Survey, Towers Watson,
2010.
The Global Talent Index Report ;The Outlook to 2015; Heidrick & Struggles & The
Economist Intelligence Unit, 2011.
Redefining Careers in India; Richa Gulati & Shatrunjay Krishna Towers Watson,
December 2011.
Retaining Talent; A Guide to Analyzing and Managing Employee Turnover; David G.
Allen, SHRM.
Slide 20