Table of Contents

1. Introduction ...3 2. Why do people leave organizations...5 3. Controlling attrition7 4. Is attrition always ad!..............................................................................14 5. "ttrition in I# $ I#%& industries23 '. Calculating "ttrition34 7. Challenges (aced y )* +anagers............................................3, -. Co+ ating "ttrition.4,. *etention strategies..............................................53 1..Conclusion..................................................'4

Introduction
Attrition
Defining attrition: /" reduction in the nu+ er o( e+ployees through retire+ent0 resignation or death/ Defining Attrition rate: /the rate o( shrin1age in size or nu+ er/

In the est o( worlds0 e+ployees would love their 2o s0 li1e their cowor1ers0 wor1 hard (or their e+ployers0 get paid well (or their wor10 have a+ple chances (or advance+ent0 and (le3i le schedules so they could attend to personal or (a+ily needs when necessary. "nd never leave. 4ut then there5s the real world. "nd in the real world0 e+ployees0 do leave0 either ecause they want +ore +oney0 hate the wor1ing conditions0 hate their cowor1ers0 want a change0 or ecause their spouse gets a drea+ 2o 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 changed in 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( 1ey e+ployees and treating attrition trou les has never een so i+portant to co+panies.

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. 7or gone are the days0 when e+ployees would stic1 to an e+ployer (or years (or want o( a etter choice. 8ow0 opportunities a ound. It is a (act that0 retention o( 1ey e+ployees is critical to the long9ter+ health and success o( any organization. #he per(or+ance o( e+ployees is o(ten lin1ed directly to :uality wor10 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 lin1ed to0 satis(ied colleagues and reporting sta((0 e((ective succession planning and deeply e+ edded organizational 1nowledge and learning.

In today5s scenario ATTRITION has become the most dangerous alarm to all HR employees' ears and Organi ation is facing troubles to fight it out! #he e+ployee attrition rate is the nu+ er o( e3its during the period divided y the average nu+ er o( e+ployees.

"hy do people lea#e Organi ations

&o+e o( the reasons why e+ployees leave there 2o s are;9 1. $eople don't get integrated! <ost organizations have an orientation progra+ which is +ore o( data9du+p or (ocused on co+pliance trainings eing co+pleted. #he (ocus should e +ore on ena ling e+ployees to (or+ networ1s within the+selves. 2. $erformance goals are unclear! In a (ast growing tea+ or usiness the (ocus is on getting the thing done today0 ut rarely are per(or+ance goals thought through and e+ployees told as to which resources to approach (or help. 3. De#elopment is al%ays tomorro%'s &ob! Culturally Indians are (ocused on learning. I( learning adds value only to the 2o and not to the overall career goals o( the individual then the organizations see+s too transactional (or the e+ployee 4. The personal touch is missing! )ow co+(orta le are +anagers uilding personal onds with their su ordinates! " lot o( +anagers shy away (earing a ond will +a1e delivering hard +essages di((icult.. 5. Re%ard systems are not transparent! <ost e+ployees who get salary increases ecause they have a rare s1ill at a particular point o( ti+e thin1 they got their raise (or e3cellent per(or+ance. '. $ercei#ed e'uity of re%ard systems is lo%! 8o +atter how +uch the hr tea+ try and pays the salary o( an e+ployee hidden other e+ployees do get to 1now o( it. %+ployees discuss salary details and i( there is any perceived lac1 o( e:uity then you have an issue = 7. (oal setting process is not scientific! <ost organizations i+pose a nor+al curve (it+ent0 ut do not train +anagers to set realistic goals or goals that tie up with organizational or (unctional goals. -. )*ternal e'uity is missing too! >rganizations at ti+e don?t do an annual co+pensation survey when the +ar1et +oves every 394 +onths. "nd i( e+ployees (eel that e3ternally co+para le pro(essionals are eing valued +ore0 then they will leave.

,. No communication around total #alue! I( the (ir+ o((ers ene(its apart (ro+ only +onetary ter+s do they co++unicate that to e+ployees too! #hings li1e

eing a glo al or niche industry leader0 value o( the rand o( the organization0 should also e +ade e3plicit. 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 stic1 to the organization or else they leave

Controlling Attrition
5

#he road ahead (or the 4B> (ir+s is very i+portant ecause i( they are not a le to control the attrition rate they will loose their co+petitive edge in the glo al +ar1et. 7or this certain0 strategies and certain i+prove+ents are needed to e +ade in the processes (ollowed. $ro#iding .omething )*tra It?s always a out providing so+ething e3tra to your e+ployees. Cood salary is so+ething which is a standard in the industry. &o what needs to e done is to give so+e per1s to the e+ployees. #hey need to e given per1s li1e rewards (or their good per(or+ances. >wing to the odd wor1ing hours0 the e+ployees have very tattered personal lives. &o per1s li1e (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 4B> co+panies as these are generally the e+ployees who gets pic1ed up y the place+ent hunters +ost o(ten. #hese e+ployees are also a+ong the +ost aspiring ones in the co+pany so there is a need to give the+ a+ple opportunity 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 its e+ployees0 it needs to uild a strong onding with the e+ployees. "s we will see in the case o( >((ice9#iger discussed elow0 there is a need to instill pride in the e+ployees. #hey need to e shown that the wor1 done y the+ is i+portant. "lso0 wor1 needs to e shown in the (or+ o( challenge to the e+ployee rather than 2ust a +onotonous routine wor1. Brovide e+ployee with %&>Bs0 which would give the+ a (eeling that they are wor1ing (or the+selves and that they are an insepara le part o( the co+pany.

The )))0-odel

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%3posure0 %3perience and %ducation are three things which are vital to any e+ployee in any sector or industry. #hese needs o( the e+ployees are needed to e ta1en care o( (or an e+ployee to (eel +otivated.

"n e+ployee e3pects the co+pany to give hi+ good e3posure in the 1ind o( wor1 he is doing. 8ot only this0 he needs to get a good e3perience wor1ing in the co+pany (ro+ its top +anage+ent and colleagues. <onthly dinner with C%> o( onding progra+s with the other e+ployees o( the 4B> industry would e a good idea. $oaching #his is so+ething which has eco+e a very ig issue in recent ti+es. Boaching +eans that one co+pany tries to get e3perienced e+ployees (ro+ other 4B>s so as to save on the training costs and so+e other associated costs. Co+panies here need to understand that poaching a((ects the industry on the whole and not only the+selves. It raises the costs to the co+panies on the whole0 and thus0 can loose their co+petitive advantage o( cheaper services i( this continues. &o+e co+panies have already understood this and have gone into an anti9poaching agree+ent.

>thers need to (ollow the sa+e. I( needs arise to hire at lateral position (ro+ the industry0 then the co+pany should encourage the inco+ing e+ployee to co+plete his statutory notice period.

HR $ractices )* is the +ost critical depart+ent in any 4B>. While conducting the recruit+ent0 it is in the hands o( )* to ring the right 1ind o( people. )* needs to identi(y the e+ployees who would stic1 with the co+pany and not get the e+ployees solely ased on the :uali(ications and co++unication s1ills. <oreover0 +ore diversity in the 1ind o( e+ployee hired needs to e rought so there is a diversi(ied culture within the co+pany. Co+panies need to loo1 to hire (ro+ non +etro cities as the e+ployees (ro+ these cities are +ore li1ely to stay with the co+pany than those (ro+ +etros. "lso0 they need to 1eep an eye on good per(or+ing e+ployees and have a career plan in +ind. 8ot only this0 they need to discuss it with these e+ployees on a regular asis and ta1e (eed ac1 (ro+ the+. #hey also need to give their e+ployees personal space to grow and ad2ust with social li(e. <oreover0 in case o( e+ployees leaving a good e3it9(eed ac1 syste+ should e in place so as to cover the reason (or which the e+ployees leave.

<anpower is the +ost crucial resource in the high growth I#9I#%& industry in India. It is also the pri+ary (actor (or the country5s i++ense success in the overseas +ar1ets0 the one 1ey asset that will help India sustain its edge in the years ahead. During 2..40 as the I#9I#%& industry pic1ed up +o+entu+0 al+ost all players0 including oth Indian and <8C organizations0 stepped up their hiring. "ccording to 8"&&C>< studies0 while around 2-40... pro(essionals were e+ployed y the I#9I#%& industry in 1,,,92...0 the nu+ ers 2u+ped to one +illion in 2..49.5. In the last year alone0 as I#9 I#%& co+panies scaled up their operations and enhanced their invest+ents0 the sector hired around 15.0... personnel.

"s de+and (or s1illed personnel went up0 issues related to e+ployee selection and retention and co+pensation levels too1 center stage. Co+panies (ocused on how they could hire and hold the pro(essionals that +attered and loo1ed at )* strategies that (ocused on e+ployee engage+ent and o((ering personnel rewarding e3periences within the organization. #he 8"&&C><9)ewitt #otal *ewards &tudy o( 2..40 the annual analysis o( the co+pensation0 ene(its and practices deployed y the Indian I#9I#%& sector0 was one such research that helped provide a co+plete picture o( the e3isting )* scenario across

the industry. 4y providing in depth in(or+ation and insights on )* issues0 the survey showed co+panies how ele+ents o( the
rewards syste+s could e lin1ed to usiness results.

#he &tudy0 now in its third year0 helped I#9I#%& organizations in India understand +ar1et practices related to total rewards and ascertain +ar1et pay across all levels. In this way0 it helped (acilitate decision +a1ing in areas such as co+pensation and ene(its including pay philosophy0 pay :uantu+0 pay structure0 internal parity0 ite+s o( pay0 etc. #he 8"&&C><9)ewitt report threw up the (ollowing (indings. It indicated that; #he +edian salaries (or the so(tware develop+ent 2o (a+ily in the I# industry had shown an average increase o( nine percent across levels on #CC during 2..4 in co+parison to 2..3 <ost levels saw a dou le digit percent year9on9year increase in co+pensation0 with 2unior and +iddle +anage+ent levels reporting a higher year9on9year increase in co+parison to senior levels. >rganizations used co+pensation as an attraction and retention strategy0 especially at these levels &o(tware develop+ent saw one o( the highest increases in salaries with an average increase o( 13.7 percent in 2..39.4 #he trend towards increase in co+pensation was on account o( (actors such as e3ponential growth o( the I# sector0 war (or talent and increase in 2o co+ple3ity I8DI"8 I#9I#%& C><B"8I%&; <>#IE"#I8C #)% W>*F7>*C% WI#) C*%"#IE% )* &#*"#%CI%& *ealizing that 1eeping +anpower +otivated was e3tre+ely i+portant to retention o( personnel0 a nu+ er o( leading Indian so(tware and services players have put in place special )* strategies over the past two to three years.

*aising salaries have o( course een an i+portant ele+ent o( these plans and things have indeed een loo1ing up. "ttrition rates0 (or instance0 have co+e down0 particularly in the last two :uarters o( 2..49.5. Co+panies such as Wipro and &atya+0 which raised o((shore salaries y 15917 percent and 1-92. percent during the >cto er98ove+ er0 2..4 phase reported higher e+ployee retention as a result o( the +easure. In(osys has said in its guidance that it e3pects salary hi1es to the tune o( 12915 percent in 7inancial Gear 2..'. <8Cs0 which have also rationalized their salary levels0 1eeping the+ closer to what their Indian counterparts o((er0 have also created a trend (or e+ployee retention y Indian ,

co+panies. H>>FI8C 4%G>8D &"H"*I%&; 7>CI& <>E%& #> &<"*# B%>BH% <"8"C%<%8# #>>H& "part (ro+ salaries0 Indian so(tware and services and I#%& co+panies are also (ocusing on s+art people +anage+ent tools and strategies to 1eep their people happy. Blayers such as Wipro are o((ering e+ployees a restricted stoc1 option progra+. %ven #C&0 which has traditionally seen low attrition levels @ elow the 1. percent +ar1A0 are o((ering additional ene(its. #he co+pany gave out shares to its personnel a(ter its (a+ed IB>. I#%&94B> services co+panies in India are also giving a 1eener loo1 to their Beople5s per1s0 while wor1ing cooperatively with conte+poraries to 1eep poaching down. &igning o( ilateral agree+ents etween I#%& (ir+s is not unco++on. >rganizations are putting in place nor+s and a code o( ethics to 1eep e+ployees (ro+ straying. I#%&94B> (ir+s are also providing a host o( ene(its to e+ployees (ro+ lu3uries such as housing sche+es0 low rate loans0 pic1 and drop0 attractive catering to having spouses wor1ing in the sa+e organization and recruiting the non recruita les @li1e housewives and old age peopleA.

"t the end o( the day0 it is apparent that etter )* policies can result in +ore co++itted and loyal +anpower. "s long as I#9I#%& organizations concentrate on issues such as e+ployee retention0 provide wor1 environ+ents that co+ ine wor1 with pleasure0 encourage continuous learning and treat e+ployees as i+portant /internal/ custo+ers0 India will re+ain a leading provider o( high :uality0 highly +otivated I# talent. #)% C>>D 8%W& Heading Indian so(tware and services +a2ors0 who have launched special strategies to develop and strengthen their wor1(orce0 have done so with signi(icant success. )ere5s what so+e o( the reputed Indian so(tware co+panies have +anaged to do with their attrition (igures; In(osys 1ept its attrition level at 1..4 percent during the :uarter ended &epte+ er0 2..40 +a1ing it a+ong the lowest (igures within the so(tware and services industry

1.

Wipro and &atya+ have witnessed a drop in their attrition levels over the third :uarter o( 2..40 as co+pared to the second :uarter. While Wipro recorded a si3 percent drop @(ro+ 1- to 12 percent during J3A0 &atya+ dropped its attrition ratge (ro+ 1, to 15 percent. i9(le3 &olutions rought down its attrition (ro+ 1, percent (or the :uarter ended Kune0 2..4 to 1' percent (or the :uarter ended &epte+ er0 2..4 )CH #echnologies success(ully controlled its attrition rate0 ringing it down to 13.1 percent (or the :uarter ended &epte+er er0 2..40 lower than 14 percent in the :uarter ended Kune 3.0 2..4 &o+e o( the s+aller co+panies were also a le to do a etter 2o o( controlling attrition

A loo1 at ho% IT0IT). companies are holding on to their people: "nti9poaching agree+ents 4etter per1s )igher co+pensation levels Well9laid career plans essential (or retaining e+ployees 4etter recruiting +ethods to (ilter the right people (or right places 4alance etween per(or+ance e3pectations and growth aspirations 8"&&C>< <a1ing a case (or e+ployee retention 8"&&C><5s I#%&94B> 7oru+ is ta1ing up the issue o( )* +anage+ent and loo1ing at strategies to i+prove the s1illed +anpower scenario. )ere5s how; 8"&&C><5s I#%&94B> (oru+ has identi(ied )* as one o( the 1ey challenges o( the I#%&94B> industry and has (or+ed a special tas1 (orce to address short9ter+ challenges such as "ttrition #o arrest this trend0 8"&&C>< is suggesting that co+panies loo1 into various options li1e good rewards0 onding progra+s0 (le3i le wor1ing hours and providing a stronger career path to e+ployees "ccording to 8"&&C>< a scienti(ic and analytical approach should e i+ple+ented y

11

Indian I# services and I#%& co+panies to address their people5s issues Bay chec1s alone are not enough to +otivate e+ployees. <anage+ent also needs to consider other aspects li1e secure career0 ene(its0 per1s and co++unication

Is Attrition al%ays bad for the industry2

While organizations la+ent the challenges that they have to constantly encounter as a conse:uence o( e+ployee turnover0 the truth is that all attrition is actually not detri+ental (or an organization. It is in (act a +yth that every ti+e an e+ployee wal1s out o( the door0 the organization su((ers. &o+e attrition is desira le and necessary (or organizational growth and develop+ent. 4ut it is i+portant (or an organization point is di((erentiating etween what is Lgood attritionM (ro+ L ad attritionM. I It ene(its an organization when certain e+ployees leave0 whose continuation o( service would have negatively i+pacted productivity and pro(ita ility o( the co+pany. #here are also so+e people who have a negative and de+oralizing in(luence on the wor1 culture and tea+ spirit. #his0 in the long9ter+0 is detri+ental to organizational health. >n the contrary0 when the departure o( certain e+ployees creates a set ac1 @+ost o(ten te+poraryA in ter+s o( wor1 continuity and progress0 is co++only considered ad attrition. #he ti+e and invest+ent lost in hiring and developing these people along with the cost o( (inding a replace+ent and ringing hi+ up to the productivity level0 all co+e at a high price.

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

4ene(its o( healthy "ttrition

Desira le attrition also includes ter+ination o( e+ployees with who+ the organization does not want to continue a relationship. It can e through resignation or y e+ployer. *e+oves ottlenec1 in the progress o( the co+pany Creates space (or the entry o( new talents0 e3ternal 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 a le to scale their per(or+ance as per e3pectations0 lac1 potential (or (uture or need disciplinary action.

13

"s the rewards are li+ited0 usiness pressures do not allow the +anage+ent to over9reward the per(or+ers0 ut when undesira le e+ployees leave the co+pany0 the 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 e3cessive +anpower costs. When certain e+ployees leave0 whose continuation o( service would have negatively i+pacted productivity and pro(ita ility o( the co+pany0 the co+pany is ene(ited.

8ew e+ployees ring new ideas0 approaches0 a ilities $ attitudes which can 1eep the 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 wor1 culture and tea+ spirit. #his0 in the long9ter+0 is detri+ental to organizational health. Desira le attrition also includes ter+ination o( e+ployees with who+ the organization does not want to continue a relationship. It ene(its the organization in the (ollowing ways; o It re+oves ottlenec1 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 a le to alance their per(or+ance as per e3pectations0 lac1 potential (or (uture or need disciplinary action. 7urther+ore0 as the rewards are li+ited0 usiness pressures do not allow the +anage+ent to over9 reward the per(or+ers0 ut when undesira le e+ployees leave the co+pany0 the good 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 wrong choice was +ade at the eginning while recruiting. %ven good attrition indicates loss as recruit+ent is a ti+e consu+ing and costly a((air. #he only positive point is 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 a conse: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 wal1s out o( the door0 the organisation su((ers. &o+e attrition is desira le and necessary (or organisational growth and develop+ent. #he point is how to di((erentiate etween what is co++only 1nown as /good attrition/ and / ad attrition/. It is a thin line0 which is not always easy to understand. It ene(its an organisation when certain e+ployees leave0 whose continuation o( service would have negatively i+pacted productivity and pro(ita ility o( the co+pany. #here are also so+e people who have a negative and de+oralising in(luence on the wor1 culture and tea+ spirit. #his in the long9ter+ is detri+ental to organisational health. >n the contrary0 when the departure o( certain e+ployees creates a set ac1 @+ost o(ten te+poraryA in ter+s o( wor1 continuity and progress0 is co++only considered ad attrition. #he ti+e and invest+ent lost in hiring and developing these people along with the cost o( (inding a replace+ent and ringing hi+ up to the productivity level0 all co+e at a high price. #he ter+ /healthy attrition/ is used to signi(y the i+portance o( less productive e+ployees voluntarily leaving the organisation. *a2an Dutta0 Bresident9)*0 Hupin0 agrees that all attrition cannot e ter+ed as ad attrition. )e (eels that it has to e viewed in the conte3t o(N

Ber(or+anceOcontri ution: The levels of performance being delivered by the

employee &1ills: Are his skills relevant in today's business context Hongitivity and growth: Has he reached his peak performance and job saturation.

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4ene(its o( desira le attrition Desira le attrition also includes ter+ination o( e+ployees with who+ the organisation does 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 a ility (or e3ecution 8ew thoughts0 ideas and hence +ore innovation and creativity at wor1 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 wor1 It is also an opportunity to induct e+ployees at a lower cost with (resh s1ills 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. 4ut when non9 per(or+ers leave the organisation0 it eco+es possi le (or the per(or+ers to get their well deserved rewards. /#urnover is straight e:uation etween assets and lia ilities. #he +ore assets the co+pany has0 the healthier and prosperous it is. Desira le turnover +otivates not only the top +anage+ent ut i( each and every e+ployee shares the ene(its0 the lowest hierarchy +otivates every ody and the ne3t year the targets could e +uch higher0/ says Dr Fash+ira Bagdiwalla0 Director @)* >perationsA0 Intas 4iophar+aceuticals @I4BHA. Bositive attrition also sends a necessary +essage to the other e+ployees that there is no place (or inco+petence. #here is also a (lip side to the situation0 though the (act that good attrition is a pointer to the (ailure o( the e3isting syste+ and processes in the organisation in hiring the right e+ployee0 groo+ing and training hi+ to e a productive wor1er.

1'

It is true that an opti+al level o( attrition is healthy (or an organisation0 whether it is good or ad. /"n average o( 2.925 percent o( attrition does a good churn o( talent0 which rings lateral thoughts to +ove the organisation in the right direction. "ttrition also helps organisation to align to e+ployee +ar1et needs and uild in a culture to sustain their i+portant e+ployees0/ says &a+path &hetty0 Eice9Bresident0 Ber+anent &ta((ing Init0 #ea+Hease &ervices. #he cost o( attrition can e co+puted with recruit+ent cost0 productivity loss till replace+ent0 training cost0 cost o( new hire and loss o( sales.

"nalysing the i+pact Broductivity and pro(ita ility are oth i+pacted0 either negatively and positively0 according to the type o( attrition. %ven good attrition is indicative o( loss as recruit+ent is a ti+e consu+ing and costly a((air. #he cost o( hiring is so+eti+es not less than two to ti+es the salary o( the e+ployee. "ny positive i+pact that can e +ade on attrition will have a direct i+pact on pro(ita ility. %3plains Bagdiwalla0 /*etentionOattrition +ay not e the ane o( a particular industry0 ut a positive i+pact via proactive strategies will +ost assuredly have a signi(icant i+pact on pro(ita ility. "s co+petition increases0 co+panies will e under pressure to cur costs and stretch every rupee. In such situations0 instead o( co+panies (ocusing on usiness9at9hand and putting /people/ issues on the ac1 urner0 they should (ocus on retaining high9 per(or+ing e+ployees and 1eeping the+ +otivated./ #he est co+panies conse:uently 1now that in all usiness cli+ates ta1ing +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 tangi le and intangi le ways. "ccording to Dutta the tangi le aspects are;

Hoss o( 1nowledge capital Delay in e3ecution o( pro2ectsOassign+ents Hoss o( production Increasing cost o( recruit+ent

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>n the intangi le (ront it would result in;

I+pact on e+ployer rand 4urden and urnout on e3isting e+ployees Internal in(or+ation and 1nowledge is eing shared outside %3isting tea+ also gets de(ocusedOde+otivated (or so+eti+e

>rganisations should e3ecute top o( the line retention policies in the right earnest and consistency. Co+panies should e +ore e+ployee9centred0 to loo1 (or (urther ways to / ond/ e+ployees to their co+panies. Co+pany per(or+ance is opti+ally aligned to the s1ills its e+ployees possess. )igh attrition i+plies that certain necessary s1ills are vulnera le 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 s1ills are constantly not availa le0 the situation gets co+pounded into a crisis with 1ey pro2ects0 revenues0 etc0 getting a((ected. 4usiness is then reduced to 2ust +anaging crisis0/ adds 4hardwa2. 7or e3a+ple0 a two percent attrition di((erence can +a1e a signi(icant di((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 to ensure that only the right talent is inducted into the co+pany. #hose (ound lac1ing in particular s1ills or co+petence should e in(or+ed o( the e3pectations (ro+ the+ and put through a training process. Continuous s1ills 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 e3isting syste+ and processes in the organization in hiring the right e+ployee0 groo+ing and training hi+ to e a productive wor1er. 8* Canti0 Chair+an and <anaging Director0 &JH &tar International0 asserted that any attrition in any (or+ is ad (or an organization. LIt +eans that a wrong choice was +ade at the eginning0M he pointed out. #he only plus point is that the realization has initiated action that will lead to cutting loss.

1-

I+pact o( attrition Direct i+pact; " high attrition indicates the (ailure on the co+pany?s a ility to set e((ective )* priorities. Clients and usiness get a((ected and the co+pany?s internal strengths and wea1nesses get highlighted. 8ew hires need to e constantly added0 (urther costs in training the+0 getting the+ aligned to the co+pany culture0 etc.0Nall a challenge. Indirect i+pact; Di((iculty in the co+pany retaining re+aining e+ployees and to what e3tent! Bro le+ (or the co+pany in attracting potential e+ployees. #ypically0 high attrition also leads to a chronic or syste+ic cycleNattrition rings decreased productivity0 people leave causing others to wor1 harder and this contri utes to +ore attrition. "ll this has a signi(icant i+pact on the co+pany?s strength in +anaging their usiness in a co+petitive environ+ent. &ource; *edileon e3ecutive search

"nalyzing the i+pact Broductivity and pro(ita ility are oth i+pacted0 either negatively and positively0 according to the type o( attrition. %ven good attrition is indicative o( loss as recruit+ent is a 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 ad attrition accentuates the loss0M stated 8air. #he cost o( hiring is so+eti+es not less than two to three ti+es the salary o( the e+ployee. #he i+pact on wor1 progress is tre+endous0 particularly i( a pro2ect is underway and one o( the 1ey people leaves. LIt leads to dip in entire organizational e((iciency0 and a lot depends on how it is a le to cover the set ac10M pointed out *ao.

1,

>rganizations should e3ecute top o( the line retention policies in the right earnest and consistency. #hey should e +ore e+ployee9centered and loo1 (or (urther ways to L ondM e+ployees to their co+panies. LCo+pany per(or+ance is opti+ally aligned to the s1ills its e+ployees possess. )igh attrition i+plies that certain necessary s1ills are vulnera le or are not present due to e+ployees eing lost. #his results in lower than opti+al levels o( usiness per(or+ance. I( the s1ills are constantly not availa le0 the situation gets co+pounded into a crisis with 1ey pro2ects0 revenues0 etc.0 getting a((ected. 4usiness is then reduced to 2ust +anaging crisis0M added 4hardwa2. 7or e3a+ple0 a 2 percent attrition di((erence can +a1e a signi(icant di((erence in the ulti+ate usiness i+pact. <anaging the pro le+ #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 processes in place to ensure that only the right talent is inducted into the co+pany. #hose (ound lac1ing in particular s1ills or co+petence should e in(or+ed o( the e3pectations (ro+ the+ and put through a training process. Continuous s1ills upgradation opportunities should also e provided to good e+ployees (or their growth and develop+ent. LCareer +anage+ent0 %&>Bs0 incre+ents0 rewards0 and a+ ience are signi(icant retention +easures0M said Canti0 re+inding that oth 1inds o( attrition are unhealthy (or usiness. When productive people leave it is understanda ly ad0 ut even when desira le attrition happens @a(ter crossing si3 to seven +onthsA0 it de(initely i+pacts the usiness. It is loss o( opportunity and invest+ent gone adly.

2.

Attrition in IT 3 IT). industries

Current scenario
#he usiness process outsourcing industry in India is growing at a pheno+enal pace. %3ports were worth P 5.2 illion in 2..'9.70 growing at 44.5 per cent and industry ody 8assco+ has pro2ected 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 2..192..2 to 30 4-0... in 2..'92..7. #he pro le+ o( attrition is worse in I#%&O 4B> co+panies where (resh talent is intensively trained and inducted and then (urther groo+ed to the successive stages. In this scenario0 the loss o( e+ployees can o(ten prove dangerous (or the co+panies? growth. #he average attrition rate in this sector is still 3594.Q.

"lso0 a 8assco+9)ewitt "ssociates survey says that the cost o( attrition in the I#O4B> industry is 1.5 ti+es the annual salary. "lar+ ells are ringing loudly in corporate corridors as attrition rates in I#%& "8D 4B> organizations average 22 percent as per a study conducted y the Indian Institute o( #echnology0 4o+ ay @II#94A with a sa+ple o( 10.2- I#%& co+panies in the country. "nother survey done y BeopleNa Cartner group co+pany specializing in the +anage+ent o( hu+an capital in I#%& organizationsNhas o served that the average tenure o( an I# pro(essional is less than three years.

#he I# ena led services @4B>A industry is eing loo1ed upon as the ne3t ig e+ploy+ent generator @8assco+ predicts 1.1 +illion 2o re:uire+ent y the year 2..-A. It is however no easy tas1 (or an )* +anager in this sector to ridge the ever increasing de+and and supply gap o( pro(essionals. Inli1e the so(tware industry counterpart0 the 4B> )* +anager is not only re:uired to (ul(ill this responsi ility0 ut also (ind the right 1ind o( people who can 1eep pace with the uni:ue wor1 patterns in this industry. "dding to this is the issue o( +aintaining consistency in per(or+ance and 1eeping the +otivation levels high0 despite the +onotonous wor1. #he toughest concern (or an )* +anager is however the high attrition rate.

21

In India0 the average attrition rate in the 4B> sector is appro3i+ately 3.935 percent. It is true that this is (ar less than the prevalent attrition rate in the I& +ar1et @around 7. percentA0 ut the challenge continues to e greater considering the recent growth o( the industry in the country. #he I& 4B> sector is esti+ated to e so+ewhere around three decades old. Feeping low attrition levels is a +a2or challenge as the de+and outstrips the supply o( good agents y a ig +argin. 7urther0 the salary growth plan (or each e+ployee is not well de(ined. "ll this only encourages poaching y other co+panies who can o((er a higher salary. #he +uch hyped /wor1 (or (un/ tag nor+ally associated with the industry has in (act ac1(ired0 as +any individuals @+ostly (resh graduatesA0 ta1e it as a pas9ti+e 2o . >nce they 2oin the sector and understand its re:uire+ents0 they are ta1en a ac1 y the long wor1ing hours and later +onotony o( the 2o starts setting in. #his is the reason (or the high attrition rate as +any individuals are not a le to ta1e the pressures o( wor1. #he toughness o( the 2o and ti+ings is not ade:uately conveyed. 4esides the induction and pro2ect training0 not +uch invest+ent has een done to evolve a /continuous training progra+/ (or the agents. <otivational training is still to evolve in this industry. 4ut0 in all this0 it is the )* +anager who is e3pected to straighten things out and help individuals ad2ust to the real world.

#o reduce attrition rate the new entrant needs to e +ade aware o( the realistic situation (ro+ day9one itsel(0 with the training session conducted in the nights0 so that they get accusto+ed to things right at the eginning. #he high percentage o( (e+ales in the wor1(orce @constituting 3.935 percent o( the totalA0 adds to the high attrition rate. <ost wo+en leave their 2o either a(ter +arriage or ecause o( social pressures caused y irregular wor1ing hours in the industry. "ll this translates into huge losses (or the co+pany0 which invests a lot o( +oney in training the+.

Gear 2..5 saw urgeoning growth o( the I# $ I#%& industry with players in the industry signing +ulti +illion dollar deals and (oreign co+panies o(( shoring greater portions o( wor1. #he growth saw co+panies e3pand operations in newer towns and cities and the

22

nature o( wor1 gravitated to higher9 end o( the value chain. Bressures on talent and pro(ita ility increased in 2..5 and co+panies loo1ed at ways to esta lish co+petitive advantage. >rganizations created progressive practices to support continuous develop+ent o( its e+ployees. #he Indian I#9I#%& industry continues to chart re+ar1a le growth with an e3pected growth o( nearly 2- per cent y e3ceeding I&D 3' illion in annual revenues in 7G 2..59.'. With such growth0 the industry is also rapidly +aturing and +oving towards a higher degree o( specialisation in various (ields li1e recruit+ent0 e+ployee rewards and co+pensation. #he (indings o( this years5 study highlights these trends and the +ar1et analysis on 1ey ele+ents o( co+pensation as well as prevalence o( critical ene(its and )* practices in the Industry <ove+ent to tier II and tier III cities has e3panded the talent ase0 ut on the other hand the shi(t (ro+ low9end usiness processes to higher value 1nowledge ased processes has a+pli(ied the challenge o( hiring specialized +anpower. >utsourcing co+panies are now (alling prey to increasing wage costs (or specialized s1ills and the need to constantly align reward practices to the +ar1et continues. "+ong the other (indings0 the study reports that there is growing trend o( the industry towards di((erentiated total rewards practices ased on specialized s1ill and co+ple3ity. 4-Q o( the survey partners said that they paid pre+iu+s (or specialized s1ills at the hiring stage and the :uantu+ payout was o(ten le(t upon the recruit+ent +anager5s discretion. 8early the sa+e nu+ er reported that they designed (i3ed pay ranges and placed e+ployees with hot s1ills in a higher :uartile within the sa+e range. >ther +ethods adopted y the industry to retain such e+ployees were hot s1ill allowances6 sign on onuses and (re:uent salary revisions.

Fey )ighlights 9 #otal *ewards &tudy 2..5 "ttraction and retention o( e+ployees re+ain to e a 1ey issue (or the I# and I#es industry. With +ore and +ore sectors +oving on a high growth tra2ectory0 the talent war

23

is increasing and attrition soaring. "t the 2unior level surveyed organizations reported an average attrition rate o( 3.Q in the I# and 4.Q in the I#es industry. Capa ility develop+ent continued to e area o( (ocus with 7.Q o( the survey partners o( the 8"&&C><9)ewitt study putting e+phasis on ongoing assess+ent o( s1ills0 1nowledge and a ilities to identi(y the e+ployees? develop+ent opportunities. #he study reveals that organizations are actively underta1ing e+ployee develop+ent +easures through initiatives such as 2o postings0 internal trans(ers0 2o enrich+ent and 2o redesign. Ber(or+ance ased pay is gaining ground within the industry as +ost e+ployees view it as an opportunity to earn +ore. <ore than -.Q organizations across these two industries report a prevalence o( short ter+ incentive plans and a out 4.Q report prevalence o( long ter+ incentive plans with stoc1 options eing the +ost (avoured. Co+pensation +ove+ent as per the study has een in the range o( -9 1.Q on #otal Cost to Co+pany. #hough over the years this industry has witnessed dou le digit salary increases0 the actual co+pensation +ove+ent on +edian has not +oved in the sa+e proportion due to co+panies ra+ping up operations and aug+ented hiring. Continued trend o( a Cash heavy co+pensation. >rganizations in this sector are increasingly designing co+pensation structures0 which are ta3 (riendly and allow e+ployees to e3ercise their choice o( ene(its through a single (le3i le allowance. Co+ple3ity ased Co+pensation gaining popularity. >ut o( the ,1 I# organizations approached0 27Q reported a (or+al di((erentiation ased on hot s1ills0 whilst 41Q said that they clearly did not di((erentiate etween s1ills in speci(ic (unctions. #he rest +aintained that they had no (or+al policy (or di((erentiation0 ut di((erentiated co+pensation asis criticality o( resource re:uire+ent. In I#%& industry0 ''Q o( the organisations reported a (or+al policy o( di((erentiating co+pensation ased on process co+ple3ity.

4angalore and 8C* reported a 39'Q incre+ent in co+pensation over the national average. <ost organizations do not have a very high di((erentiation in co+pensation across locations0 those that do di((erentiate pay ased on locations0 pri+arily align it to attraction and retention challenges in the location and cost o( living di((erences.

24

With 4.Q attrition rate0 B* industry to grow at I&P ' ln y 2.1.; "&&>C)"< "ttrition now has seized B* industry with its rate e3ceeding 4.Q even i( its growing at an annual rate o( 32Q and li1ely to dou le its size to over I&P ' illion y 2.1. (ro+ over I& P3 illion presently since corporates are relying +ore on B* pro(essional to hi1e their rand i+age to ta1e +a3i+u+ ene(its o( current econo+ic oo+ (or increased sales $ turnover volu+es. #he survey reveals that pressures apart0 in B* activities diversi(ication o( intellect is +ost attracting part which avail the+ lot o( opportunities and that is why the attrition rate is so high0 (elt over 75Q o( the respondents. " +a2ority o( B* pro(essional said that in the econo+ic oo+0 a huge co+petition has e+erged (or rand uilding as result o( which B* agencies are in de+and and :uoting a very +ar1et driven prices (or their services (or which ta1ers are availa le. &ince de+and (or B* pro(essional are rising and so are opportunities galoring (or relationship industries and it is ecause o( this reason it has shown a growth rate o( a out 22925Q in last couple o( years which has now risen to 32Q and the trend will continue in (uture and even grow (or etter "ccording to esti+ates y the "&&>C)"<0 the Indian B* industry co+prises 12..9 15.. agency with their +anpower strength o( etween 3.0... to 4.0.... 4usiness is oo+ing (or the pu lic9relations @B*A industry. It is in this discipline that the industry has seen +ost growth and e3pects to see continuing growth in the (uture. In ter+s o( vertical +ar1ets0 healthcare has een identi(ied y several o( the industry as the (astest9growing sector6 however0 the pu lic sector0 the environ+ent and corporate social responsi ility @C&*A are all e+erging as growth areas (or B*.

#he overriding concern o( the industry is the s1ills shortage. "l+ost all agencies are hiring0 a trend that is itsel( indicative o( growth0 and so+e are loo1ing outside the B* industry to ring in new s1ills. "lthough there are +any thousands o( s+all agencies and individual consultants serving very local +ar1ets0 larger agencies are (orging partnerships across the glo e to Bu lic

25

relation is eing used as a supple+ent along with advertising to (or+ an e((ective co++unication strategy. #his is pri+arily ecause at ti+es advertising does not su((ice in co++unicating the e3act +essage. Bu lic relation services not only help in co++unicating their +essage ut can also help in generating a (avora le response. "ny average B* agency5s nor+al retainer (ee can e anywhere etween *s 2.5 to *s 5 la1hs. &hortage o( pro(essionals in B* 1. Hure o( etter pay; I( s1illed +anpower is scarce0 pro(essionals will inevita ly e poached (or higher salaries. 2. Headership crisis; 4eing a (airly new industry it does not have too +any esta lished players. )ence0 there are very (ew veterans and worthy leaders in top +anage+ent positions. #his presents a crisis o( leadership in s+aller (ir+s0 which +a1es people +ove onto larger and +ore reputa le co+panies. 3. Hac1 o( understanding o( B*; It +ay co+e as a surprise ut +ost people still have a very vague notion o( B*. 4ecause o( the scorching pace o( growth0 these agencies are (acing an acute shortage o( trained +anpower. #his is re(lected in the 3.935 per cent hi1e in top9level salaries the sector has seen in the last one year. #o co+pound the pro le+0 attrition rates have touched 3.94. per cent. 4B>s are now adding a hu+an touch to their )* policies to rein in rising attrition rate Deter+ined 2o 9hopping see+s an integral part o( the 4B> industry today. #o deal with this constant (lu30 4B>s in Bune ca+e together and charted out a policy which included a non9poach agree+ent and insistence on a relieving letter (ro+ the previous e+ployer.

#he idea o( a shared e+ployee data ase was discussed to ensure that people with cri+inal records do not get into 2o s where they can access sensitive data o( custo+ers and their an1 or credit card details. While these +easures have not created a new uzz word in the 4B> industry over low attrition rate0 these rates have co+e down to 259 4.Q (ro+ a high o( 359 '.Q in the past two years. 4B> co+panies who (or+ulated a negative list0 o( don?ts0 also drew up a positive list to use education and the (a+ily as retention tools. &o now you get 4B> co+panies roping in the (a+ily o( the e+ployee0 getting the+ to visit the o((ice pre+ises0 to uild con(idence and attach+ent with the co+pany.

2'

While the attrition rates in the Indian 4B> industry are etween a staggering 5. per cent and '. per cent according to recent esti+ates0 attrition in even the Indian so(tware industry0 too0 has eco+e a cause (or concern. )* pro(essionals say that a +a2ority o( call centre e+ployees :uit (or want o( ade:uate (uture prospects though a vast +a2ority o( those who :uit actually stic1 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( Indian industry. "gainst the nor+ o( (ive per cent attrition across the entire Indian industry0 I# sector +a2ors li1e In(osys0 &atya+ and Wipro have +anaged to ring attrition rates down to 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 +a2ority o( the rapidly growing I# O I#e& sector in India. "ccording to 8assco+ studies0 while only 2-40... pro(essionals were e+ployed y the I# O I#e& industry in 1,,,92...0 the nu+ ers had increased to one +illion in 2..49.5. "s de+and (or s1illed personnel has een rising steadily over the past two years0 issues o( 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 hold pro(essionals who +atter and are loo1ing at )* strategies0 which are (ocused on e+ployee engage+ent and providing their personnel with rewarding e3periences within the organisation.

)iring the right people and getting the+ to stay is the do+ain o( Fene3a #echnologies0 a I&9 ased hiring and retention (ir+ that has set up a centre in )ydera ad. )ead:uartered in Bennsylvania0 its custo+ers vary in size and include +ore than 1.. o( the 7ortune 5.. and hal( o( the Dow 3. co+panies. We have (ound that the longevity o( an e+ployee in the wor1place depends on his engage+ent with that organisation. 4y engage+ent we +ean the atte+pts an organisation to +a3i+ise the e3perience o( an individual within that co+pany. We elieve that very highly satis(ied e+ployees do leave ut engaged e+ployees are li1ely to stay on +ore. We +ade that distinction and started +easuring the engage+ent space.

27

In the process we developed two distinct spheres o( operations. >ne was to identi(y the right talent and second to recruit it. In the process o( talent ac:uisition we realised we needed to i+prove the e((iciencies o( the talent +anage+ent syste+. We do this through our product called Brove It. In India the costs o( hiring are going up. With rising salaries recruit+ent udgets are going haywire. It now ta1es +ore ti+e to (ind a single person ecause e+ployers have eco+e (inic1y a out hiring 2ust the right people. In earlier days0 e+ployers loo1ed (or leadership :ualities a(ter a nu+ er o( years ut now they want leaders (ro+ the start. #his is ecause so(tware organisations in India cater to glo al co+panies who e3pect high :uality output. &o high is the :uality e3pectation that certain co+panies in India e3perience worse than ..- ratio in recruit+ent. #hat +eans that a(ter scrutinising 1.. pro(iles they cannot (ind even one person= %+ployees are also gearing up (or higher e3pectations and are getting so(t s1ills0 which was not there ten years ago. Beople dress up very well when they go (or an interview and spea1 %nglish with an accent. #he (ocus on outward appearance and loo1s has de(initely increased.

Indian 4B>5s costs are rising as salaries and e3pectations also rise. In the years ahead0 Indian 4B>s +ay 2ust lose their cost advantage and outsourcers will e (orced to lower cost locations. It is thus i+portant (or Indian to +ove into the higher end o( the wor1 pyra+id such as research and develop+ent and innovation. 4ut at the rate at which call centres are co+ing up0 in the ne3t decade there is also the +uch igger danger o( India turning into a nation o( call centres with the +a2ority o( the student co++unity aspiring (or nothing +ore than to eco+e call centre e+ployees. #he +uch9tal1ed a out high attrition rate in 4B>s is also nothing ut call centre e+ployees +oving (ro+ one call centre to another (or :uic1er salary increases. #he Indian 4B> Industry 8>W

2-

#he Indian 4B> industry is di((erent in +any ways (ro+ traditional usinesses in India and even (ro+ the I# industry0 with which it shares +any attri utes. &o+e +a2or points o( parity and disparity are; 9 Inli1e the I# industry0 4B> reaches out to the +asses. "ny college degree is enough to enter the industry0 and given the rate at which this industry is growing0 there will always e opportunities (or +ost college graduates who want a 2o 0 have aptitude0 and are willing to wor1 hard. Customers; #he early adopters o( Indian 4B> are so+e o( the largest <8Cs in the world @Citigroup0 "+e30 C%0 )&4C0 etc.A. #hese are also so+e o( the +ost de+anding custo+ers6 they can ench+ar1 against the est in the world6 they lay down the highest standards (or delivery and are ruthless in de+anding these (ro+ their service providers. Infrastructure; #he 4B> industry has ta1en a lea( out o( the I# industry5s oo1s and has not stinted on the :uality o( in(rastructure0 pre+ises0 o((ice (urniture0 and general wor1 environ+ent. #he need to 1eep people +otivated and e3cited has resulted in a lot o( e+phasis eing placed on creating a (un and attractive wor1place. #oday0 the 4B> e+ployees in India can ta1e a world9class wor1ing environ+ent (or granted.

Training; #he initial un(a+iliarity with client processes0 sti(( +etrics0 need (or :uality 9 all translate into a very signi(icant training re:uire+ent0 and again0 the 4B> industry has +ore than risen to this challenge. "ll new 4B> e+ployees undergo rigorous training and certi(ication. <oreover0 so+e o( the +aterial eing used is a solutely world9class0 and in +ore than one instance0 has een adopted y the custo+er (or use at the ho+e location. 4uality; Driven y the custo+ers0 the Indian 4B> industry has i+ple+ented e3tensive :uality progra++es0 and certi(ications li1e C>BC0 I&> ,..2 and 4& 77,, are co++onplace. #his (urther rein(orces the tough standards that the service providers are re:uired to achieve. " :uestion which arises now is that why to e+ployees leave and what is the reason that the 4B>s are not a le to hold the+ ac1. Well0 the +ost o vious reason that co+es to +ind is higher pay. <ost e+ployees in 4B> are approached with two or three 2o o((ers

2,

every wee10 and so+eti+es it gets very te+pting to resist. #he deterring (actor (or this would e +oving (ro+ one location to another with the (a+ily as housing and relocation are two +a2or concerns o( the e+ployees. #hough this pro le+ is eing ta1en care to a certain e3tent y a salary rise o( 1.915Q annually on an average asis0 ut still it prevails. "nother (actor which can e a ig deterrent is the wor1 ti+ings. #he wor1 ti+ings in 4B> are very odd. #his a((ects the (a+ily li(e o( the e+ployee. <oreover0 the +ale to (e+ale ratio in 4B> is :uiet low. #he nu+ er o( (e+ales in 4B> can e as large as 35Q. #his +eans that wor1ing hour pro le+ is :uiet acute in their case especially a(ter they get +arried0 as a(ter +arriage co+es social and (a+ily pressure to ad2ust wor1 ti+ings and ta1e care o( (a+ilies. #hough the a ove 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 at the senior level. #his +eans that other e+ployees loo1 (orward to change their 2o at other places where they can get etter opportunities to progress. "lso0 another pro le+ arises with the +is9+atch o( e3pectations and :uali(ications o( the e+ployees. "long with that0 so+e e+ployees see no career growth in this sector0 so they +ove on to other co+panies in search o( changing the sector.

>ne +ore reason (or e+ployees leaving the (ir+ is higher education. #his is a pro le+ as +ost o( the e+ployees in this sector are pretty young and aspiring. #hey 2oin the (ir+ ecause o( lucrative salary. 4ut 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.

3.

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 ran1s a+ong the top priorities o( call center +anagers0 it eco+es an even greater concern as 2o s eco+e +ore plenti(ul. "nd (or good reason 9 when turnover rates are high0 the cost to an organization can e su stantial. 4eyond the o vious e3pense o( recruiting and training0 call centers with high turnover o(ten see :uality and productivity rates drop. #his can have a cyclical i+pact0 leading to repeat calls0 lower service levels0 a +ore stress(ul environ+ent and0 in turn0 higher turnover. Civen the enor+ous i+plications0 turnover should e trac1ed and +anaged 2ust as diligently as other 1ey 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+ one organization to the ne3t. 7or e3a+ple0 so+e call centers operate with annual rates o( less than 5Q0 while others see rates o( well over 5.Q percent. @"ccording to IC<I research0 +any call centers are in the 15Q to 3.Q range.A "n i+portant (irst step in +anaging

31

turnover is to calculate your annualized turnover accurately0 so that you have a consistent asis (or co+parison and trending. #here are two (igures you5ll need in order to calculate annualized turnover 9 the nu+ er o( agents e3iting 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 y ta1ing an average o( the counts at the end o( each wee1 o( the +onth6 alternatively0 you can ta1e an average o( the trained sta(( count at the eginning and end o( the +onth.A

#he (or+ula IC<I reco++ends (or calculating turnover is as (ollows; #urnover R @nu+ er o( agents e3iting the 2o average nu+ er o( agents during the periodA 3 @12 nu+ er o( +onths in the periodA 7or e3a+ple0 let5s say your data is as in the (ollowing chart; Ising the (or+ula0 your annualized turnover rate co+es out to 2ust under 2,Q; @2. 1.4A 3 @12 -A R 2-.-Q

While 1nowing your overall turnover rate is valua le0 we reco++end rea1ing it down (urther0 into internalOe3ternal and voluntaryOinvoluntary categories. Internal turnover re(ers to e+ployees that leave the call center ut stay within the organization6 e3ternal turnover re(ers to e+ployees that leave the organization entirely. Eoluntary turnover is when e+ployees decide to leave0 while involuntary separation occurs when +anage+ent +a1es the decision to end e+ploy+ent @e.g.0 through layo((s or (iringA.

32

In the e3a+ple we 2ust 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 roadly categorized 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 ac1ground chec1s0 any costs associated with search (ir+s or place+ent agencies0 and0 potentially0 relocation 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 to co+petitors.

#urnover can also yield ene(its. 7or e3a+ple0 i( e+ployees leave (or other positions within the organization0 the call center gains e3perienced advocates in other depart+ents. #urnover +ay also reduce structural costs @assu+ing new e+ployees are rought in at lower pay scalesA and create the +eans (or the call center to ring in new e+ployees with needed s1ills and (resh insights. #he causes and costsO ene(its will vary y type o( turnover. 7or e3a+ple0 voluntary e3ternal turnover is +ore o( a detri+ent to the organization than planned internal

33

turnover. Do enough analysis to e a le to esti+ate the relative i+pact o( each type o( turnover. ID)NTI9:IN( TH) CA6.). O9 T6RNO8)R #o +anage turnover0 you +ust understand what causes it. Co++on ways to identi(y causes include;

Conduct a 2o and salary analysis vis99vis +ar1et conditions. Conduct group +eetings with agents to discuss environ+ental (actors0 such as stress0 +anage+ent style0 wor1load0 etc. *eview the orientation progra+ to ensure 2o s are eing accurately represented to new e+ployees

"nalyze e3it interviews. Conduct regular e+ployee satis(action surveys.

&peci(ic causes can vary widely @see the side ar elowA0 and identi(ying the top (ive to seven 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 centers0 there 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++on areas o( (ocus include; I+prove hiring and 2o (it. )iring candidates ased on the right 2o :uali(ications and ehavioral co+petencies will i+prove your chances (or a etter 2o (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 2o s in the call center are internally and e3ternally e:uita le. %ven i( you5re udgets are tight0 don5t count this strategy out 9 it +ight e +ore practical and less e3pensive than +eets the eye i( you5ve really analyzed and identi(ied the true costs o( turnover.

34

%nsure that agents receive ti+ely coaching and (eed ac1. %ncouraging the positive aspects o( the agent5s per(or+ance0 +odeling desired actionsO ehaviors and wor1ing with the+ to create (easi le action plans that will ena le the+ to achieve o 2ectives are essential steps. Brovide opportunities (or ongoing s1ill and career develop+ent. "gents who see their position as dyna+ic and evolving are +ore li1ely to re+ain co++itted to the call center. Create a s1ills9 ased pay progra+ and0 i( possi le0 a co+pelling career path in the call center to encourage agents to continually e3pand their 1nowledge and capa ilities. Brovide as +uch (le3i ility in wor1 schedules as possi le. Call center scheduling ta1es creativity and co++unication since oth wor1load re:uire+ents and agent re:uire+ents +ust e acco++odated as +uch as possi le.

I+prove supervisor training. It5s o(ten said that agents don5t leave co+panies 9 they leave their supervisors. #a1ing steps to ensure that your supervisors have the s1ills and 1nowledge necessary to e the est +anagers possi le can i+prove retention dra+atically. Brovide recognition. "ccording to +uch o( the research on turnover0 2ust saying than1s (or a 2o well done goes a long way towards 2o 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 prover ial tip o( the ice erg. >ther strategies can range (ro+ i+ple+enting a teleco++uting progra+0 to esta lishing a +entoring progra+0 designing etter incentive plans and i+proving (acilities design. 9INDIN( TH) RI(HT /A5ANC) " certain a+ount o( turnover is inevita le and accepta le 9 your challenge is to deter+ine 2ust what that accepta le level is. #o do so0 it5s i+portant to understand the (ull cost o( turnover and co+pare it to the costs associated with sta(( retention progra+s. #he 1ey is to (ind the right alance; you don5t want to spend +ore +oney retaining sta(( than it costs to replace the+0 ut you also don5t want to spend +ore +oney replacing sta(( than it costs to 1eep the+. "+ong the practical criteria to consider when see1ing the right alance are;

#he +a3i+u+ a+ount the co+pany is willing to pay (or these positions.

35

"vaila ility o( a s1illed la or 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. Don5t leave it to chance.

Challenges for HR managers

#he I# ena led services @I#%&A industry is eing loo1ed upon as the ne3t ig e+ploy+ent generator @8assco+ predicts 1.1 +illion 2o re:uire+ent y the year 2..-A. It is however no easy tas1 (or an )* +anager in this sector to ridge the ever increasing de+and and supply gap o( pro(essionals. Inli1e his so(tware industry counterpart0 the I#%& )* +anager is not only re:uired to (ul(il this responsi ility0 ut also (ind the right 1ind o( people who can 1eep pace with the uni:ue wor1 patterns in this industry. "dding to this is the issue o( +aintaining consistency in per(or+ance and 1eeping the +otivation levels high0 despite the +onotonous wor1. #he toughest concern (or an )* +anager is however the high attrition rate. In India0 the average attrition rate in the I#%& sector is appro3i+ately 3.935 percent. It is true that this is (ar less than the prevalent attrition rate in the I& +ar1et @around 7. percentA0 ut the challenge continues to e greater considering the recent growth o( the industry @read the less ti+e spanA in the country. #he I& I#%& sector is esti+ated to e so+ewhere around three decades old. "ccording to Eai hav0 assistant +anager9)*0 I#$#0 1eeping low attrition levels is a +a2or challenge as the de+and outstrips the supply o( good agents y a ig +argin. 7urther0 the salary growth plan (or each e+ployee is not well de(ined. "ll this only encourages poaching y other co+panies who can o((er a higher salary. #he +uch hyped Lwor1 (or (unM tag nor+ally associated with the industry has in (act ac1(ired0 as +any individuals @+ostly (resh graduatesA0 ta1e it as a pas9ti+e 2o . >nce they 2oin the sector and understand its re:uire+ents0 they are ta1en a ac1 y the long wor1ing hours and later +onotony o( the 2o starts setting in. #his is the reason (or the high attrition rate as +any individuals are not a le to ta1e the pressures o( wor1. "ccording to I+esh Eyas0 vice president and senior consultant0 head9 I#%&0 J"I India0 the reason ehind this is the Lgla+our and (un co+ponentM0 which is

3'

high in co++unication to prospective e+ployees. #he toughness o( the 2o and ti+ings is not ade:uately conveyed. 4esides the induction and pro2ect training0 not +uch invest+ent has een done to evolve a Lcontinuous training progra++eM (or the agents.

<otivational training is still to evolve in this industry. 4ut0 in all this0 it is the )* +anager who is e3pected to straighten things out and help individuals ad2ust to the real world. LI elieve that the new entrant needs to e +ade aware o( the realistic situation (ro+ day9one itsel(0 with the training session conducted in the nights0 so that they get accusto+ed to things right at the eginning0M says Eyas. #he high percentage o( (e+ales in the wor1(orce @constituting 3.935 percent o( the totalA0 adds to the high attrition rate. "niruddha Hi+aye0 vice president9)* $ training0 Da1sh e&ervices0 elieves that +ost wo+en leave their 2o either a(ter +arriage or ecause o( social pressures caused y irregular wor1ing hours in the industry. "ll this translates into huge losses (or the co+pany0 which invests a lot o( +oney in training the+. LI( a person leaves a(ter the training it costs the co+pany a out *s '.0.... 7or a 3..9seater call centre (acing the nor+al 3. percent attrition0 this translates into *s '. la1h per annu+0M points out Eyas. <any e3perts elieve that all these challenges can turn out to e a real da+pener in the growth o( this industry. "grees *avi Dutta0 the head0 )*0 e7unds. "ccording to hi+0 the recurring recruit+ent costs ecause o( attrition are detri+ental. #he sa+e also leads to recurring training costs. Inconsistent per(or+ance directly a((ects revenues. Dwindling +otivation levels leads to loss o( interest in the 2o and higher nu+ er o( errors. #his only raises the responsi ility o( L(inding the right candidateM and uilding a Lconducive wor1 environ+entM0 which will e ene(icial (or the organisation. #he need is (or those individuals who can +a1e a career out o( this. "ccording to Eai hav0 the +ost crucial challenge (aced y an )* +anager in the I#%& sector is to get a large nu+ er o( individuals who have e3cellent written and ver al co++unication s1ills0 at a((orda le cost. L%ven though this sector gives an individual scope (or i+prove+ent during vigorous training periods0 there are particular aspects o( speech and conversation which are not traina le0M he says. )e adds that there is a dearth o( reputed and esta lished training institutes (or call centres0 there(ore organizations have to handle such +anpower challenges internally. #he co+pany has set an ela orate training in(rastructure with specially trained and :uali(ied in9house trainers.

37

#ransWor1s In(or+ation &ervices0 adds that the )* needs to e vigilant a out s+all things li1e (ood0 transport (acilities0 wor1 environ+ent0 (acility layout0 a+enities and convenience support to the e+ployees. LCosts to ta1e care o( these things should ta1e precedence over other e3penses (or )*. #he )* strategy +ust have at its centre o( (ocus people needs and re:uire+ents. It +ust also uild in the (le3i ility net to ad2ust to a sudden de+and (ro+ e+ployees or (or e+ployees0M he says.

"ll this has induced the co+panies to ta1e necessary steps0 oth internally and e3ternally. Internally +ost )* +anagers are usy putting in e((orts on the develop+ent o( their e+ployees0 uilding innovative retention and +otivational sche+es @which was +ore +oney oriented so (arA and +a1ing the environ+ent livelier. >utside0 the (ocus is on creating awareness through se+inars and going to ca+puses (or recruit+ent. #hough the industry has ta1en a lot o( initiative in conducting training (or new entrants and agents0 it is develop+ent o( the s1ills o( +iddle +anage+ent @co+prising o( the tea+ leaders and supervisorsA0 which needs to e ta1en care o(. Due to the vertical +ove+ent in the industry0 +ost individuals get pro+oted a ran1 or two a ove their current position. )owever0 since they do not have any +anage+ent ac1ground0 things start eco+ing di((icult (or the+ @considering +ost who 2oin the industry are2ust graduatesA. "ll this not only a((ects the scale0 service and :uality o( the co+pany0 ut also on the personality o( the individual who (eels at loss. "ccording to +ost industry e3perts0 with technologies0 techni:ues0 processes and +ethodologies eing rede(ined and reinvented y the day0 the contact centre +anager needs to constantly handle changes in +anage+ent philosophy and operational practice to success(ully and consistently deliver custo+er goals. #he I#%& co+panies are conse:uently now usy designing develop+ent initiatives (or their e+ployees. Hi+aye says0 LWe try helping people identi(y their strengths and wea1nesses0 pic1 up their pro le+9solving s1ills and their leadership a ilities. #his eing a people9driven usiness0 the e+phasis is +ore on i+proving their personalities and processes and help each individual e+erge as a winner.M )e points out that )* +anagers need to 1eep in +ind that one shoe does not (it all and each individual has di((erent capa ilities. &o0 in spite o( the vertical +ove+ent in this industry0 )* +anagers should try developing horizontal career options0 which will only help in enhancing an individual?s personality and strengths. #hese options areNgrowth content specialists0 trainers0 :uality e3perts or even help in operational and usiness develop+ent o( the organisation. In spite o( so +any initiatives0 industry e3perts (eel that the +a2or concern is that no ody has really ta1en it as a Lcareer choiceM ut a Lpass9ti+eM or Lti+e9

3-

gap e+ploy+entM. I( a +ature industry has to evolve0 the picture needs to e changed wherein it eco+es LtheM choice industry li1e its so(tware counterpart.

"lready grappling with a 3. per cent attrition rate @the highest in the "sia9Baci(ic region0 co+pared to China at 1.915 per centA0 the industry is e3pected to have a +anpower shortage o( 20'20... in 2..-. In a country where 3 +illion graduate every year0 the tas1 is daunting. )* consultants say one o( the 1ey gaps eing (aced y the industry is the low level o( e3pertise at (rontline @lower9+iddleA +anage+ent0 in +anaging and sustaining an I#%&9 4B> operation. #he ine3perienced +iddle and (rontline +anage+ent is one o( the 1ey causes o( attrition. "nother distur ing data is that nearly 5. per cent o( those who :uit leave the industry. &o what5s the way out! 7irst0 the industry has to get out o( its i+age o( an Internet sweatshop where an e+ployee is resigned to his (ate o( eing in o((ice at ungodly hours (or a dead9end 2o . Co+panies which have not een a le to tac1le this i+age could ta1e 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+ wor1s as a ig assurance (or 4B> e+ployees that the s1ills they have learnt such as custo+er (riendliness and rapid response to custo+er pro le+s have wider applications and +ar1et de+and. >ver the last si3 years o( wor1ing with the I# industry in consulting assign+ents0 I have wondered 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 (aster than any other conventional industry0 at the 1nowledge wor1er level! Curt Co((+an $ <arcus 4uc1ingha+ argue in their est seller 7irst 4rea1 "ll the *ules that Le+ployees don?t leave organisations ut their +anagers.M #here has een a pheno+enal change in e+ployee perception o( LloyaltyM over the last decade and is especially true o( 1nowledge wor1ers. What the organisation can e3pect (ro+ an e+ployee has dra+atically changed (ro+ LloyaltyM to Lco++it+ent9to9causeM and so have the (actors causing the+.

3,

#here was a ti+e when providing good wor1ing conditions0 a ove par pay and per1s could +otivate people to stay and per(or+. With the (ace o( usiness changing and 1nowledge wor1ers increasing in proportion in al+ost all organisations0 the (actors that currently attract and retain people are opportunities to learn and grow

4.

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( an e+ployee who can +ost in(luence this (actor and that is where crisis o( leadership is hurting I# organisations the +ost0 in ter+s o( leeding intellectual capital. Is there a way out o( this! In the (ast9paced I# wor1 environ+ent0 there is very li+ited ti+e and +indshare devoted y a +anager to his tea+ +e+ er?s personal develop+ent and there y he is not in(luencing the e+ployee?s perception o( growth. I have also o served that the 1ey reasons (or +any e+ployees o( I# organisations to e in the industry is (or etter pay and wor1ing conditions co+pared to other conventional industries. #here(ore0 they don?t co+e in with very good talent align+ent with the roles they play in the I# industry. In other words0 this is not their real choice o( wor1. #he typical I# +anager is not wor1ing ade:uately on aligning his tea+ +e+ ers to roles which use their natural talents e((ectively. #oday?s I# +anager lac1s oth the ti+e and tools needed (or +a1ing this assess+ent and corrective action. 4eing too logical and tas1 driven0 pushed y deadlines0 the typical I# +anager is una le to cope up with the (le3i ility in leadership styles re:uired0 ased on his tea+ +e+ ers? +aturity levels and the situation. #he result is0 he stic1s to what ever is his natural leadership style. <ore o(ten than not0 it does not wor1 (or the e+ployee chosen ecause he thin1s very di((erently (ro+ the +anager. #he easy way out De(iciencies li1e ina ility to in(luence e+ployee perception o( growth6 not aligning e+ployees to roles ased on their individual talent0 in(le3i ility in leadership styles0 are causing con(licts at a very intrinsic level0 resulting in e+ployees choosing the prover ial Leasy way out.M #hey atte+pt to change the +anager or wor1 environ+ent and hope (or the est to happen. #hough the current environ+ent presents enough opportunities (or people with relevant s1ill sets and enough +anpower (or organisations to choose (ro+0 the turnover without dou t leeds value out o( an I# organisation0 oth in ter+s o( ti+e and +oney. #he only 1ey to solving this pro le+ is to i+prove the leadership a ilities o( I# +anagers0 to learn how to +anage di((erences in thin1ing o( e+ployees and aligning e+ployee talents to wor1 roles. "n organisation0 y (ocusing on the a ove0 can save up to 25 percent o( its annual revenues0 which it loses as a result o( attrition.

41

#his is i+portant considering the (act that the cost o( attrition in the industry is 1.5 ti+es the annual salary. 4B>s have also started +oving up the value chain 99 a pri+ary reason why the industry needs to put its act together to +eet the co+ing crisis (or trained +anpower. 7or e3a+ple0 the e3pectation is that y 2..70 the industry de+and (or Kava pro(essionals alone will touch three +illion. >n its part0 8assco+ is doing what it can y e3ploring the concept o( a national s1ills registry o( I# e+ployees0 which will operate on a shared services +odel and will e ad+inistered y a credi le third party. #he industry ody is also co+ing out with an assess+ent and certi(ication progra++e to create an e+ploya le talent pool with ench+ar1ed9re:uisite s1ills and will shortly unveil an assess+ent and certi(ication (or (rontline +anage+ent. " 8assco+9FB<C study has +ade detailed reco++endations (or attracting0 training0 certi(ying and deploying resources (or the I#%& industry. &o+e o( these reco++endations0 which are worth i+ple+enting0 i++ediately are;

"n I#%&OI# awareness (und e created with industry support to generate awareness a out e+ploy+ent in these industries0 especially in #ier II and III cities through advertise+ents0 wor1shops0 se+inars and counselling sessions. %3isting in(rastructure in universitiesOcolleges and e3isting vocation counseling centres e leveraged0 especially in #ier II and s+aller towns to provide career counseling in I#%&OI# opportunities.

&o+e I# co+panies have o( course done pioneering wor1 to eco+e an e+ployer o( choice. #C&0 (or e3a+ple0 has put in place a co+prehensive acade+ic inter(ace progra++e @"IBA0 process (ra+ewor1 and proper in(rastructure.

Cost o( "ttrition
#here are a nu+ er o( costs which are incurred y a 4B> when they hire any new e+ployee. #hese costs can e in ter+s o( +onetary or can e in ter+s o( ti+e wasted or any other intangi le things. &o+e o( these costs can e as stated elow; 9

42

1. )iring or *ecruit+ent Costs; Costs o( advertise+ent0 agency costs0 e+ployee re(erral costs0 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 2o 0 co+pany policies0 etc.0 they are not (ully productive. 4. 8ew )iring Costs; Cost o( ringing new person a oard0 ti+e ta1en in understanding the 2o o( the e+ployee who le(t and other per1s given. 5. How &ales Cost; %3perience and the contacts that were lost0 ti+e (or which the position was 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 a co+pany0 the cost can e close to *s. '.0... or appro3i+ately e:ual to 2 +onths salary. 7or a 3..9seater call9center with an attrition rate o( 3.Q0 it can e as large as *s. '. la1h per annu+.

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

I( a person leaves a(ter the training it costs the co+pany a out *s '.0.... 7or a 3..9 seater call centre (acing the nor+al 3. percent attrition0 this translates into *s '. la1h per annu+. <any e3perts are o( elieve that all these challenges can turn out to e a real da+pener in the growth o( this industry. #his only raises the responsi ility o( /(inding the

43

right candidate/ and uilding a /conducive wor1 environ+ent/0 which will e ene(icial (or the organization. #he need is (or those individuals who can +a1e a career out o( this. "ll this has induced the co+panies to ta1e necessary steps0 oth internally and e3ternally. Internally +ost )* +anagers are usy putting in e((orts on the develop+ent o( their e+ployees0 uilding innovative retention and +otivational sche+es @which was +ore +oney oriented so (arA and +a1ing the environ+ent livelier. >utside0 the (ocus is on creating awareness through se+inars and going to ca+puses (or recruit+ent. 4elow the sur(ace999W)G I& "##*I#I>8 " <"K>* B*>4H%< I8 I#%& I8DI&#*G! S S S S 4eing a people9intensive industry0 it is characterized y 1nowledge wor1ers who are pro(essionals. #he )* issues here are :uite di((erent (ro+ those in other people9intensive industries. #here are lots o( (orces a((ecting the industry oth directly and indirectly. Coing as e3it interviews conducted y di((erent co+panies0 these pro(essionals are switching 2o s (or either +oney0 career satis(action or the opportunity to wor1 with newer technologies. Hac1 o( +atch etween personal re:uire+ents and organizational culture

Combating attrition
)* pro(essionals all over the world0 wor1ing is Call9Center or Contact Center or 4B> industry are rea1ing their heads to (or+ulate *etention &trategies ut nothing is wor1ing in their (avor. #he average attrition rate in this sector is still 3594.Q. 8o per1s0 no 44

rewards2ust nothing is wor1ing. 4e(ore proceeding (urther0 lets see why people are leaving! Why there is high attrition rate. Why people are +oving! When there are so +any ene(its associated with 4B> industry. when there are so +any privileges (or the 4B> e+ployees than what +a1es the+ to change the co+panyOindustry!! Is it only <>8%G that +atters or anything else as well!! "(ter ta1ing e3it9interviews and analyzing the trend I a+ a le to list out (ollowing reasons (or a 4B> pro(essional to change hisOher 2o . 8o growth opportunityOlac1 o( pro+otion 7or higher &alary 7or )igher education <isguidance y the co+pany Bolicies and procedures are not conducive 8o personal li(e Bhysical strains Ineasy relationship with peers or +anagers

)mployee /enefits $ro#ided /y -a&ority Of the /$O Companies " part (ro+ the legal and +andatory ene(its such as provident9(und and gratuity0 elow is a list o( other ene(its4B> pro(essionals are entitled to the (ollowing; 1. Croup <edi9clai+ Insurance &che+e; #his insurance sche+e is to provide ade:uate insurance coverage o( e+ployees (or e3penses related to hospitalization due to illness0 disease or in2ury or pregnancy in case o( (e+ale e+ployees or

45

spouse o( +ale e+ployees. "ll e+ployees and their dependent (a+ily +e+ ers are eligi le. Dependent (a+ily +e+ ers include spouse0 non9earning parents and children a ove three +onths 2. Bersonal "ccident Insurance &che+e; #his sche+e is to provide ade:uate insurance coverage (or )ospitalization e3penses arising out o( in2uries sustained in an accident. #his covers total O partial disa le+ent O death due to accident and due to accidents. 3. &u sidized 7ood and #ransportation; #he organizations provide transportation (acility to all the e+ployees (ro+ ho+e till o((ice at su sidized rates. #he lunch provided is also su sidized. 4. Co+pany Heased "cco++odation; &o+e o( the co+panies provides shared acco++odation (or all the out station e+ployees0 in (act so+e o( the 4B> co+panies also underta1es to pay electricityOwater ills as well as the &ociety charges (or the shared acco++odation. #he purpose is to provide to the e+ployees to lead a +ore co+(orta le wor1 li(e alance. 5. *ecreation0 Ca(eteria0 "#< and Concierge (acilities; #he recreation (acilities include pool ta les0 chess ta les and co((ee ars. Co+panies also have well e:uipped gy+s0 personal trainers and showers at (acilities. '. Corporate Credit Card; #he +ain purpose o( the corporate credit card is ena le the ti+ely and e((icient pay+ent o( o((icial e3penses which the e+ployees underta1e (or purposes such as travel related e3penses li1e )otel ills0 "ir tic1ets etc 7. Cellular Bhone O Haptop; Cellular phone and O or Haptop are provided to the e+ployees on the asis o( usiness need. #he e+ployee is responsi le (or the +aintenance and sa(eguarding o( the asset.

-. Bersonal )ealth Care @*egular +edical chec19upsA; &o+e o( the 4B>5& provides the (acility (or e3tensive health chec19up. 7or e+ployees with a ove 4. years o( age0 the +edical chec19up can e done once a year. ,. Hoans; <any 4B> 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( their wedding. "nd0 #he new recruits are provided with interest (ree loans to assist the+ in their initial settle+ent at the wor1 location. 1.. %ducational 4ene(its; <any 4B> co+panies have this policy to develop the personality and 1nowledge level o( their e+ployees and hence rei+ urses the e3penses incurred towards tuition (ees0 e3a+ination (ees0 and purchase o( oo1s su 2ect0 (or pursuing <4"0 andOor other +anage+ent :uali(ication at India5s top +ost 4usiness &chools. 4'

11. Ber(or+ance ased incentives; In +any 4B> co+panies they have plans (or0 per(or+ance ased incentive sche+e. #he para+eters (or calculation are process per(or+ance i.e. speed0 accuracy and productivity o( each process. #he Bay (or Ber(or+ance can e as +uch as 22Q o( the salary. 12. 7le3i9ti+e; #he +ain o 2ective o( the (le3ti+e policy is to provide opportunity to e+ployees to wor1 with (le3i le wor1 schedules and set out conditions (or availing this provision. 7le3i le wor1 schedules are initiated y e+ployees and approved y +anage+ent to +eet usiness co++it+ents while supporting e+ployee personal li(e needs .#he (actors on which 7le3i ti+e is allowed to an e+ployee include; Child or Barent care0 )ealth situation0 <aternity0 7or+al education progra+ 13. 7le3i le &alary 4ene(its; Its +ain o 2ective is to provide (le3i ility to the e+ployees to plan a ta39e((ective co+pensation structure y alancing the +onthly net inco+e0 yearly ene(its and inco+e ta3 paya le. It is applica le o( all the e+ployees o( the organization. #he &alary consists o( 4asic0 D" and Conveyance "llowance. #he 7le3i le 4ene(it Blan consists o(; )ouse *ent "llowance0 Heave #ravel "ssistance0 <edical *ei+ urse+ent0 &pecial "llowance

14. *egular Cet together and other cultural progra+s; #he co+panies organizes cultural progra+ as and when possi le ut +ost o( the ti+es0 once in a :uarter0 in which all the e+ployees are given an opportunity to display their talents in dra+atics0 singing0 acting0 dancing etc. "part (ro+ that the organizations also conduct various sports progra+s such as Cric1et0 (oot all0 etc and regularly play +atches with the tea+s o( other organizations and colleges. 15. Wedding Day Ci(t; %+ployee is given a gi(t voucher o( *s. 2...O9 to *s. 7...O9 ased on their level in the organization. 1'. %+ployee *e(erral &che+e; In several co+panies e+ployee re(erral sche+e is i+ple+ented to encourage e+ployees to re(er (riends and relatives (or e+ploy+ent in the organization. 17. %+ployee &toc1 >ption Blan 8ow0 the actual :uestion0 why people are leaving! What types o( retention

47

strategies are re:uired! What is e3pected (ro+ )* Bro(essional and how they can address this issue! *etention 9 " 4ig Challenge 7unda+ental changes are ta1ing place in the wor1 (orce and the wor1place that pro+ise to radically alter the way co+panies relate to their e+ployees. )iring and retaining good e+ployees have eco+e the chie( concerns o( nearly every co+pany in every industry. Co+panies that understand what their e+ployees want and need in the wor1place and +a1e a strategic decision to proactively (ul(ill those needs will eco+e the do+inant players in their respective +ar1ets.

#he (ierce co+petition (or :uali(ied wor1ers results (ro+ a nu+ er o( wor1place trends0 including; " ro ust econo+y &hi(t in how people view their careers Changes in the unspo1en /contract/ etween e+ployer and e+ployee Corporate cocooning " new generation o( wor1ers Changes in social +ores Hi(e alance Concurrent with these trends0 the e+erging wor1 (orce is developing very di((erent attitudes a out their role the wor1place. #oday5s e+ployees place a high priority on the (ollowing; 7a+ily orientation Juality o( li(e issues "utono+y

4-

#o hold onto your people0 you have to wor1 counter to prevailing trends causing the 2o churning. &+art e+ployers +a1e it a strategic initiative to understand what their people want and need 99 then give it to the+.

Retention .trategies
#his is not an e3haustive list0 one can add or delete any o( the elow +entioned strategies. &econdly0 the need o( the hour is to have /right asics/. %very individual is di((erent0 his needs are di((erent0 and his e+otions0 his pro le+s are di((erent. &o0 dear )*9Bro(essionalssit down and concentrate on your asics. I have classi(ied retention strategies into two parts; <ain and "ncillary. <ain retention strategies #his is not an e3haustive list0 one can add or delete any o( the elow +entioned strategies. &econdly0 the need o( the hour is to have /right asics/. %very individual is di((erent0 his needs are di((erent0 and his e+otions0 his pro le+s are di((erent. &o0 dear )*9Bro(essionalssit down and concentrate on your asics. 1. Co++unications 9 Cetting Gour Beople to Care

4,

Co++unication is the (irst step toward creating the 1ind o( environ+ent that people care a out0 and i( they care0 they 2ust +ay stay. I5+ not tal1ing a out a lot o( 8ew "ge stro1ing designed to ring out the inner person or (alse praise that creates a +isplaced sense o( security. Instead0 1eep your people in the loop a out what5s 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 1eep your people up to date with i+portant events a((ecting the co+pany. I( 8ove+ er was good0 let the+ 1now0 and while you5re at it0 tell the+ what you e3pect to happen in Dece+ er. &hare good news0 as well as points o( concern. I( you5ve got /issues0/ tal1 a out the+ e(ore they start +a1ing you crazy. "nd i( they don5t get resolved0 (igure out whether the pro le+ 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 they are. #hey +ay not have to worry a out covering the payroll this wee10 ut they do have worries o( their own. #reat the+ with at least as +uch respect as they give you. "s the store5s owner or +anager0 you set the tone (or the entire organization. I( your salespeople0 (or instance0 en2oy their encounters with you0 they are +uch +ore li1ely to greet custo+ers with a positive attitude. #hey are also +uch +ore li1ely to en2oy their wor1 when they don5t have a (ire9 reathing dragon loo1ing to singe their utts. 3. Histen to your e+ployees when they have ideas (or i+prove+ent. "gain0 the ene(its e3tend eyond 2ust +a1ing people (eel appreciated (or their contri utions. #hese are0 a(ter all0 the people who do the wor1 every day. #hey +ay have so+e ideas to i+prove productivity0 and when they do co+e up with one0 let every ody 1now where it ca+e (ro+. Bost a / rag oard/ in your rea1 roo+0 or circulate an internal newsletter that touts these contri utions. #he pay9 o(( is a contagious (eeling o( pride and0 perhaps0 so+e new e((iciency that saves the co+pany +oney. 4. &et Clear %3pectations o )ow o(ten do you appraise your e+ployeesOtea+9+e+ ers! o What are your e3pectations (ro+ your e+ployeesOtea+9+e+ ers! What are the para+eters to +easure their per(or+ance! )ave you co++unicated to the+! o What will e the conse:uences0 i( they (ail! o What will e the rewards0 i( they e3ceed the e3pected level! I( you are not having any e3pectations0 how you are going to appraise0 your e+ployees! Ges0 you are going to e iased0 ecause you don5t have set standards.

5.

#he role o( a C%>0 )* <anager is li1e a director o( a +ovie6 choreographer o( a stage show0 where there is a de(ined role (or each character0 each participant.

&etting e3pectations initiates the process. <anagers need to sit down with each e+ployee and clearly de(ine what5s e3pected o( the+. <anage+ent consultant0 Fenneth Bhilips0 states that when e3pectations are not clear0 e+ployees +ay not e in sync with their 2o 5s current de+ands and priorities. &etting e3pectations is not a once and done activity. Ko s change. Briorities change. *esources change. <anagers need to revise and set new e3pectations throughout the year. &etting e3pectations revolves around the (ollowing three areas;
o o o

Fey 2o responsi ilities Ber(or+ance (actors and standards Coals

Why is a setting e3pectation i+portant! Juite si+ply0 this process can e the cornerstone o( i+proving the +otivational cli+ate within your sphere o( responsi ility. I( your e+ployees 1now what is e3pected o( the+0 it allows the+ to (ocus on results and to +onitor the+selves against the set standards. %nviron+ents in which e3pectations are not clear0 or change (ro+ wee1 to wee10 seldo+ create high9per(or+ing wor1 groups. #he three principles that should drive e3pectations are clarity0 relevance0 and si+plicity. Clarity. %3pectations should (ocus on outco+es0 not activities. In other words0 you achieve clarity when you identi(y the e3pected results rather than the +ethod (or achieving the+. <anagers o(ten +a1e the +ista1e o( atte+pting to direct the process that an e+ployee will use rather than eing clear a out results. #he advantage o( identi(ying the outco+e is that you0 the +anager0 (ocus only on the goal6 a(ter all0 the e+ployee will develop the +ethod (or achieving the desired results. De(ining the o 2ective o(ten re:uires so+e thought on the part o( the +anager ecause it is easy to (all into the /activities trap./ While developing a strategic

51

plan (or a depart+ent or division is a worthy activity0 it does not represent an outco+e. In the activities trap0 developing a plan is the goal0 rather than increasing your +ar1et 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 pro2ect5s i+portance0 they can +a1e ad2ust+ents as unanticipated (actors crop up within the process. #hey pro a ly also will e +ore co++itted to the result ecause they can see +ore easily 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 su ordinate0 which allows (or a +ore thorough review o( the situation and (or (eed ac1 and discussion. #his process uilds good will with the e+ployee and sets the stage (or additional responsi ilities.

.implicity. &i+plicity creates a sense o( grounding (or e+ployees as they endeavor to carry out assign+ents. I( +anagers identi(y the wor1 in si+ple0 straight(orward ter+s0 e+ployees will (ind it +uch easier to (ollow through on +anagers5 wishes. #o acco+plish this0 a +anager +ust identi(y the 1ey +essage in a (ashion that the e+ployee can e+ race. 5. Broper *ewarding " research reports says that in today5s scenario0
o o o

7.Q o( your e+ployees are less +otivated today than they used to e. -.Q o( your e+ployees could per(or+ signi(icantly etter i( they wanted to. 5.Q o( your e+ployees only put enough e((ort into their wor1 to 1eep their 2o .

"s you +ight e aware o( %+ployee *eward covers how people are rewarded in accordance with their value to an organization. It is a out oth (inancial and non9 (inancial rewards and e+ races the strategies0 policies0 structures and processes used to develop and +aintain reward syste+s. #he ways in which people are valued can +a1e a considera le i+pact on the e((ectiveness o( the organization0 and is at the heart o( the e+ploy+ent relationship.

52

#he ai+ o( e+ployee reward policies and practices0 i( any in your organization is to help attract0 retain and +otivate high9:uality people. Cetting it wrong can have a 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:uently in 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; 4uild 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+e0 at very little cost.

&o+e very ordinary ite+s and events can e i+ ued with e3traordinary +otivational signi(icance0 (ar in e3cess o( their +onetary value. I a+ constantly a+azed at how +otivating a pizza or +ovie tic1ets can e i( is given with su((icient appreciation. " sincere than1 you can e delivered at any place and at any ti+e0 costs a solutely nothing and can e +ore +otivationally power(ul than a su stantial +onetary onus. >rganizations can provide innovative recognition in an in(inite nu+ er o( ways.

7or e3a+ple0 @" )ypothetical IncidentA a s+all +anu(acturing co+pany +ade its e+ployees (eel li1e heroes when they attained a +a2or sa(ety +ilestone 9 1.. days without a single accident. >n the +orning o( day 1..0 it was announced that a catered lunch would e served the ne3t day0 i( they +ade it to the 5;3. shi(t without an accident. "t 5;15 anticipating was uilding. <anagers too1 con(etti and strea+ers to the alcony overloo1ing the shop (loor. When the 5;3. whistle lew0 there were congratulations all around0 con(etti (lew through the air and anners were un(urled. It was a great +o+ent (or everyone 9 and one that was not soon (orgotten. #he recognition value o( this cele ration was e3tre+ely high0 while the +onetary cost was relatively low. )ighly +otivating organizations even cele rate s+all successes. " health9 conscious co+pany distri utes (ruit owls to e+ployees5 wor1 areas when 1ey personal +ilestones are attained. "nother co+pany uses a +ore (attening approach; (resh9 a1ed chocolate9chip coo1ies to say than1 you. *educe entitle+ents and lin1 as +any rewards as possi le to per(or+ance.

53

Clearly the traditional /pay (or loyalty/ syste+s in +ost organizations need to e changed. Don5t let attendance e your +a2or criterion (or rewards. <ost e+ployees resent those who only put in their ti+e and yet receive the sa+e reward as those who go the e3tra +ile. #oday5s e+ployees have higher e3pectations (or what wor1 can and should e0 and they want to receive rewards that re(lect their personal e((orts and contri utions. #his is why so +any co+panies are +oving toward per(or+ance9 ased rewards0 including per(or+ance onuses0 gain9sharing and non9+onetary recognition. "lthough not a panacea0 co+panies are (inding that these new reward syste+s do allow the+ to give su stantial rewards to those who really deserve the+. &+art organizations are loo1ing (or opportunities to reduce across9the9 oard entitle+ents0 and there y (ind +ore resources (or discretionary per(or+ance9 ased rewards0 without increasing the total cost o( rewards.

#rou leshoot your reward syste+ to +a1e sure that what it is rewarding is what you really want to happen. #he Haw o( *ewards 9 /What you reward is what you get/ 9 Is e3tre+ely power(ul. 8o +atter what your orientation +aterials or 2o description +ight say0 it is the rewards your organization gives that co++unicate the real e3pectations. #he +ost i+portant :uestion to as1 in evaluating the reward syste+ in your organization is0 do the rewards we are giving elicit the per(or+ance we want! &tart with the results you want to achieve and then pinpoint the types o( ehaviors needed to achieve the+. 7or e3a+ple;
o

o o

I( you elieve tea+wor1 is going to get you the results you want0 +a1e sure you reward tea+wor10 and not internal co+petition etween depart+ents. I( you want :uality0 +a1e sure that productivity isn5t over e+phasized. "nd0 I( you want long9ter+ solutions0 don5t reward :uic1 (i3es

"lso0 don5t con(use e+ployees with too +any rewards. It is etter to (ocus rewards on the critical (ew ehaviors and results0 rather than diluting the+ y rewarding the trivial +any. *eward pro+ptly. *ewards should e given as soon as possi le a(ter the per(or+ance has ta1en place. #his is why the +ost success(ul gain9sharing

54

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+eone to repeat a ehavior0 you should positively recognize it i++ediately. 7ro+ this law0 s+art supervisors and +anagers can learn a vital lesson; Hoo1 (or any e+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 to recognize an e+ployee who had 2ust done a great 2o 0 he spontaneously pic1ed up a anana @which his wi(e had pac1ed in his lunchA0 and handed it to the astonished e+ployee with hearty congratulations. 8ow0 one o( the highest honors in that co+pany has een du ed the /Colden 4anana "ward/./ Cive e+ployees a choice o( rewards. *ewards are as di((erent as the people who receive the+ and it doesn5t +a1e sense to give rewards that recipients don5t (ind rewarding. 7or e3a+ple0 so+e people pre(er +ore pay0 while others pre(er +ore ti+e o((. " pro+otion +ight e +ore rewarding to one person0 while a 2o 9 sharing arrange+ent +ight e +ore rewarding (or another. &o+e people are e3cited a out sports events0 others a out +ovies. &o+e e+ployees would love a dinner in a ro+antic restaurant0 others a oo1 y their (avorite author. 7ood0 (un0 education0 i+proved wor1 environ+ent0 gi(ts0 travel0 (a+ily9oriented activities 9 the options are endless. )ow do you 1now what will e rewarding to e+ployees! "s1 the+. &+art organizations are also letting e+ployees choose their own rewards (ro+ reward +enus and catalogs. Bersonalizing rewards shows that a co+pany cares enough to discover what /interests/ each e+ployee0 rather than 2ust distri uting generic ite+s. It also reduces the (ollowing danger; In one organization I was visiting0 an e+ployee opened a ig drawer in his des1 and disdain(ully showed +e all the /worthless trin1ets/ 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 1eys to reward longevity is sy+ olis+. #he +ore sy+ olic an ite+ is o( the acco+plish+ent0 the +ore li1ely it is to continue re+inding the e+ployee o( why it was given. 7or instance0 a #9shirt o( co((ee +ug with a +eaning(ul inscription will continue rewarding those who wear it0 or use it0 long a(ter its initial receipt. #here are +any to1ens o( appreciation I still 1eep on or near +y des1 that re+ind +e o( the 2oy o( past acco+plish+ents0 while the +onetary rewards I have received are long spent and long (orgotten. "nother way to increase the longevity o( rewards in your organization is y using

55

so+e 1ind o( point syste+. *ather than rewarding each individual ehavior or acco+plish+ent0 points can e awarded0 which e+ployees can accu+ulate and eventually trade (or ite+s (ro+ a reward +enu or gi(t catalog. #his 1eeps the anticipation 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 de it9card syste+ to help larger clients cope with the co+ple3ity o( distri uting0 trac1ing and redee+ing e+ployees5 points. %+ployees can use their points to purchase virtually anything they want0 (ro+ sports e:uip+ent and clothing to auto+o iles and overseas vacations. #hey only caveat (or such progra+s is to +a1e sure that the recognition value o( the rewards isn5t lost ecause o( the i+personal nature o( the technology. >ne co+pany uses a ga+e it Call &a(ety 4ingo. "ll e+ployees receive a wee1ly ingo card. When an e+ployee is o served wor1ing sa(ely0 a nu+ er is presented @i++ediate recognitionA. When they get / ingo/0 they receive a sa(ety 2ac1et @along with appropriate ver al rein(orce+entA. #he rewards escalate (or su se:uent wins. #his type o( progra+ 1eeps e+ployees interested (or long periods o( ti+e0 even though there +ight e wee1s or +onths etween rewards0 and +a1es routine wor1 +ore (un overall. Interestingly0 when researchers have investigated the +otivational dyna+ics o( these wor1place ga+es0 they have (ound that the +a2or +otivator is the playing0 not the prize. 4e continually vigilant o( de+otivators that +ay under+ine your organization5s est e((orts to provide power rewards0 and reduce the+ pro+ptly. <ost de+otivators can e dra+atically reduced y soliciting e+ployee involve+ent in identi(ying highest9priority de+otivators and y enlisting top9 +anage+ent co++it+ent to support their reduction.

It is pro a ly sel(9evident that considera le sensitivity is needed in the ad+inistration o( any reward syste+. >ne de+otivator that is pro a ly ende+ic in any reward syste+ +odi(ication @especially as an organization +oves (ro+ entitle+ents to +ore per(or+ance9 ased rewardsA is a sense that so+ething is eing ta1en away. %+ployees need to e educated a out the reasons that this is eing done0 understand the ulti+ate ene(its to the+ and the organization0 and should pro a ly have so+e input into the change process. #o avoid the perception o( un(airness0 it is i+portant0 (irst and (ore+ost0 that the process (or allocating rewards is viewed y e+ployees as eing i+partial. #his re:uires an o 2ective +easure+ent syste+ that (ew organizations have. Without

5'

such o 2ective +easure+ent0 any reward syste+ is pro a ly destined to (ailure. "ncillary *etention &trategies #he :uality o( the supervision an e+ployee receives is critical to e+ployee retention. Beople leave +anagers and supervisors +ore o(ten than they leave co+panies or 2o s. It is not enough that the supervisor is well li1ed or a nice person0 starting with clear e3pectations o( the e+ployee0 the supervisor has a critical role to play in retention. "nything the supervisor does to +a1e an e+ployee (eel unvalued will contri ute to turnover. 7re:uent e+ployee co+plaints center on these areas.
1.

Hac1 o( clarity a out e3pectations0 Hac1 o( clarity a out earning potential0 Hac1 o( (eed ac1 a out per(or+ance0 7ailure to hold scheduled +eetings0 and 7ailure to provide a (ra+ewor1 within which the e+ployee perceives he can succeed.

#he a ility o( the e+ployee to spea1 his or her +ind (reely within the organization is another 1ey (actor in e+ployee retention. Does your organization solicit ideas and provide an environ+ent in which people are co+(orta le providing (eed ac1! I( so0 e+ployees o((er ideas0 (eel (ree to criticize and co++it to continuous i+prove+ent. I( not0 they ite their tongues or (ind the+selves constantly /in trou le/ 9 until they leave.
2.

#alent and s1ill utilization is another environ+ental (actor your 1ey e+ployees see1 in your wor1place. " +otivated e+ployee wants to contri ute to wor1 areas outside o( his speci(ic 2o description. )ow +any people could contri ute (ar +ore than they currently do! Gou 2ust need to 1now their s1ills0 talent and e3perience0 and ta1e the ti+e to tap into it. "n internal sales rep0 with seven years o( ad agency and logo develop+ent e3perience0 repeatedly o((ered to help. )is o((er was ignored and he cited this as one reason why he :uit his 2o . In (act0 the recognition that the co+pany didn5t want to ta1e advantage o( his 1nowledge and capa ilities helped precipitate his 2o search. 4. #he perception o( (airness and e:uita le treat+ent is i+portant in e+ployee retention. In one co+pany0 a new sales rep was given the +ost potentially success(ul0 co++ission9producing accounts. Current sta(( viewed these decisions as ta1ing (ood o(( their ta les. Gou can et a nu+ er o( the+ are loo1ing (or their ne3t opportunity.
3.

In another instance0 a sta(( person0 2ust a year or two out o( college0 was given 2.0... in raises over a si3 +onth ti+e period. In(or+ation o( this type never stays secret in co+panies so you 1now0 eyond any shadow o( 57

a dou t6 the +orale o( several other e+ployees will e a((ected. 7or e3a+ple0 you have a sta(( person who views her role as i+portant and she rings ten years o( e3perience0 an <.4.". and a great contri ution record to the ta le. When she (inds she is +a1ing less +oney than this e+ployee0 she is li1ely to loo1 (or a new 2o . <ini+ally0 her +orale and +otivation will ta1e a ig hit. Did the sta(( person deserve the raises! Ges. 4ut0 recognize that there will e i+pact on others. 6. Gour est e+ployees0 those e+ployees you want to retain0 see1 (re:uent opportunities to learn and grow in their careers0 1nowledge and s1ill. Without the opportunity to try new opportunities0 sit on challenging co++ittees0 attend se+inars and read and discuss oo1s0 they (eel they will stagnate. " career9oriented0 valued e+ployee +ust e3perience growth opportunities within your organization. 7. " co++onplace co+plaint or la+ent I hear during an e3it interview is that the e+ployee never (elt senior +anagers 1new he e3isted. 4y senior +anagers I re(er to the president o( a s+all co+pany or a depart+ent or division head in a larger co+pany. #a1e ti+e to +eet with new e+ployees to learn a out their talents0 a ilities and s1ills. <eet with each e+ployee periodically. Gou5ll have +ore use(ul in(or+ation and 1eep your (ingers on the pulse o( your organization. It5s a critical tool to help e+ployees (eel welco+ed0 ac1nowledged and loyal. 8. 8o +atter what the circu+stances are ut never0 never0 ever threaten an e+ployee5s 2o or inco+e. %ven i( you 1now layo((s loo+ i( you (ail to +eet production or sales goals0 it is a +ista1e to (oreshadow this in(or+ation with e+ployees. It +a1es the+ nervous6 no +atter how you phrase the in(or+ation6 no +atter how you e3plain the in(or+ation0 even i( you5re a solutely correct0 your est sta(( +e+ ers will update their resu+es. I5+ not advocating 1eeping solid in(or+ation away (ro+ people6 however0 thin1 e(ore you say anything that +a1es people (eel they need to search (or another 2o .
5.

%3perts are o( the view that since the I# industry thrives on individuals with a vital 1nowledge ase0 the industry should help e+ployees develop their 1nowledge ase (urther in addition to giving the+ appropriate +onetary and other co+pensation in order to retain talent. Co+ ating attrition involves +anage+ent o( people and a thorough understanding o( the hu+an psyche. )igh levels o( e+ployee turnover occur due to a co+ ination o( various wor1place environ+ent in(luences and personal choices +ade y the e+ployees. In 2..30 a 8ational "ssociation o( &o(tware and &ervice Co+panies @8"&&C><A survey identi(ied so+e o( the +a2or drivers o( attrition @*e(er #a le IA...

*ecruit+ent %((ective recruit+ent strategies can help organizations in e+ployee retention. Co+panies (ollowing the traditional +ethods o( recruit+ent o served that a +a2or draw ac1 o( the

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traditional selection processes was either a poor response or a +is+atch etween co+pany goals and individuals5 e3pectations... Co+pensation and *ewards Incentives 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 asic pay 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 his contri ution to the overall co+pany pro(its... >rganization Culture &tudies and surveys analyzing the psyche o( the e+ployee have (ound that the wor1 environ+ent has a +a2or i+pact on the ehavior o( an e+ployee. "n e((ective retention strategy would involve ac1nowledging the e+ployee as the internal custo+er and aligning the organizational strategies with e+ployee needs and wants... Wor19Hi(e 4alance %+ployees di((erentiate a good e+ployer (ro+ any other e+ployer through the (eeling o( Twell eing5 that is generated at the wor1place. " alance etween wor1 and the personal goals and wants o( an e+ployee contri utes positively to the retention o( e+ployees... Hearning $ Crowth #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 1nowledge (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. It was o served that leaders incapa le o( +otivating and guiding e+ployees pushed e+ployees to change 2o s (re:uently. Wipro initiated the TWipro Headers5 Jualities &urvey5 in 1,,2...

Conclusion
#he usiness process outsourcing @4B>A industry in the country which is e3pected to e+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 2.Q94.Q in so+e (ir+s0 while the top ones averages at least 15Q. 8assco+ in a report said the outsourcing industry was e3pected to (ace a shortage o( 2'20... pro(essionals y 2.12. #he size o( the Indian 4B> +ar1et is li1ely to e around P,912 illion y 2..' and will e+ploy around 4..0... people0 IC*" said in its Indian 4B> industry report. 5,

<ercer India said the industry should loo1 eyond the traditional areas o( recruit+ent and so+e thought should e given to e+ploy physically challenged people and housewives. #he reasons (or the high rate o( attrition was due to various (actors li1e salary0 wor1 ti+ings0 other career options0 adding that there is always the danger o( costs increasing while illing rates decline. With 24501.. people e+ployed at the end o( <arch 310 2..4 against 17101.. last year0 the industry witnessed a hiring growth rate o( a out 4.942 percent. >n the hiring (ront0 the industry a sor ed a out 740... people in 2..3 despite the attrition rate o( 4595. percent eing a +atter o( concern. "ttrition rates in I#9ena led usiness process outsourcing sector have co+e down (ro+ the 3.933 per cent eing witnessed o( late to a out 25 per cent now0 according to statistics co+piled y the 8ational )u+an *esource Develop+ent 8etwor1. "ttrition rates I& "ustralia %urope India Clo al "verage Q 42Q 2,Q 24Q 1-Q 24Q

U&ource9#i+es 8ews 8ew Gor1 @2..3A

I( you co+pare attrition rates (or a Eoice and 8on9voice process0 then attrition rates are signi(icantly lower in a non9voice process. "s the industry +oves up the value chain and eco+es a (ull9scale 4B> player0 attrition rates will (urther decrease. 7or 4B> service providers0 +oving up the value chain is critical0 given the attrition rates in the industry0 which are on an average higher in low value9added seg+ents @in call centresA as co+pared to higher value9added seg+ents li1e engineering. It will not e possi le (or the industry to arrive at a lan1et agree+ent on poaching ut ilateral agree+ents etween co+panies are eing signed. 4asic nor+s are eing put in place and code o( ethics is eing stressed upon y industry. Co+panies are eing encouraged to adopt responsi le ehavior in order to ensure that the industry does not eco+e a victi+ o( its own actions. Industry needs to go aggressive ut not canni alistic. In order to ensure a consistent (low o( trained +anpower in the (uture0 the industry needs to wor1 with the govern+ent to introduce courses at a school and college level0 which are in line with the re:uire+ents o( the I#%&94B> industry. India has one o( the largest pool o( %nglish spea1ing graduate wor1(orce. #he challenge (or the industry is not in

'.

e+ploy+ent ut e+ploya ility. #he industry is also hiring pro(essionals (ro+ outside the industry in order to +eet its steady supply o( +anpower. )onest corporate +anagers will tell you that to +a1e o((shoring wor10 you need at least a 3..Q to 4..Q wage spread etween "+erican so(tware writers0 engineers0 accountants0 and call9center e+ployees and their Indian and Chinese counterparts. Ha or costs have to e very0 very low overseas 99 not 2ust lower 99 to co+pensate (or ti+e9shi(ting0 +anaging over such long distances0 and decreased productivity. )igh attrition rate0 price wars0 poor in(rastructure and lac1 o( data protection laws could derail India5s oo+ing outsourcing industry. #his see+ed to su+ up the views o( 4B> (raternity at the 8assco+ su++it here. #ac1ling "ttrition )ead9>n Industry e3perts (eel0 as the industry was still in its nascent strategy there was lot o( strategies availa le to reverse this trend and +a1e it an attractive e+ployer. 8"&&C>< I#%&94B> (oru+ has identi(ied )* as one o( the 1ey challenges o( the I#%&94B> industry and has (or+ed a special tas1 (orce to address short9ter+ challenges such as "ttrition and also long9ter+ challenges such as ensuring availa ility o( a s1illed talent pool. #o arrest this trend0 co+panies can loo1 into various options li1e good rewards0 onding progra++e0 (le3i le wor1ing hours and stronger career path. With attrition rates ranging etween 3.9'. percent in the 4B> industry0 )* specialists (eel that a scienti(ic and analytical approach should e i+ple+ented. #he tre+endous turnover rate is undenia ly one o( the +ain pro le+s (aced y the 4B> industry glo ally. )* specialists at the 8assco+ 2..4 su++it rainstor+ed on various approaches to handle this ug ear9 either declare war on attrition and tac1le it head on0 or adopt a +ore scienti(ic analytical approach. Bay che:ues alone are not enough to retain e+ployees. <anage+ent also needs to consider other aspects li1e secure career0 ene(its0 per1s and co++unication. #he attrition attle could e won y (ocusing on retention0 +a1ing wor1 a (un place0 having education and ongoing learning (or the wor1(orce and treating applicants and e+ployees in the sa+e way as one treats custo+ers. Co+panies need to go in (or a diverse wor1(orce0 which does not only +ean race0 gender diversity0 ut also include age0 e3perience and perspectives. Diversity in turn results in innovation and success. #he -.;2. rule also applies to recruit+ent0 she :uipped0 since studies showed that -. percent o( the co+pany5s pro(it co+es (ro+ the e((orts o( 2. percent o( the e+ployees. &o 4B>s need to (ocus on roles0 which have the +ost i+portant i+pact.

'1

"ccording to e3perts0 the cost o( attrition is 1.5 ti+es the annual salary. "ge should not e a arrier (or training e+ployees and could in (act ring in +ore sta ility to the co+pany.

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