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Mounting attrition costs and talent crunch – two reasons, and enough to get the HR wheels rolling in any organisation today
Hemanshoe Arora, earned the nickname ‘He Man’ and this has stuck onto him all his life. It was another thing that he was oblivious to the reason behind the same... However, today it seems different – we’re referring to his nickname – for he actually feels like he’s earned it well considering his professional life. And just like He-Man would shout, he surely feels that he has the power.
“Power?” You ask? Yes, indeed. It’s the power that you get from being treated as an extremely scare resource by his company, by making him feel powerful as a competent and a value-adding entity. Precisely so; for Hemanshoe has all the reasons to feel on top of the world... Controlling attrition and retaining their best talents, today, organisations today have pulled up their socks, to save the outflux of precious talent from their offices and plants and yes of course, vying to get chosen as the top ‘Employer of Choice’. And there is some good reason attached to winning the crown as Malini Deekshit, VP – HR (India & Mauritius), HTMT Global Solutions divulges, “An employer of choice goes beyond prospective employees. It creates a positive disposition of influencers who may be clients, stake holders, suppliers and partners. Hence the spin-off effects can be far reaching. A title like this adds to the brand value too.”
One cannot also deny that these are testing times and talent crunch is an element necessarily found in the business air around us. Also with opportunities aplenty and with compensations getting fatter each hour, every organisation wants to avoid that feeling of discontentment amongst its employees. Another phenomenon that is getting the HR think tank work-up innovative initiatives for their employees is the mounting cost of attrition which as per People First Solutions Ltd., “On average, costs companies 18 months’ salary for each manager or professional who leaves, and 6 months’ pay for each hourly employee who leaves.” More shockingly, the report titled The Hidden Cost of Attrition showed how attrition (in other words, failing to retain your best people) can cause a company to lose up to 40% of its profits – some pinch for the company’s bottom line! The situation gets more baffling with a visible parameter like pay dissatisfaction being ranked 7th on the list of reasons why employees leave as per Accenture. The other factors triggering the negative reaction being ‘lack of opportunities’, ‘ill-growth’ et al. So talent management has definitely become a tougher ball-game to play.
However, it is not just the dearth of talented people and a pocketful that the companies have to spend on filling vacant positions that makes living a challenge for the HR department; what about revenue growth and market share? Surely, controlling internal factors while battling external competitors is growing into a bigger challenge for capitalistic entities.
But the companies seem to have found a solution here too. Recall the HCL or the Citibank TV commercial where the employee himself does the talking on the company’s behalf. In fact Citibank’s ad shows the dedicated employee giving the best possible solution to his customers, even while off-work (like on his morning jog et al).
So do you think the companies are doing a bit too much here? Surely with so much at stake, they are doing just what’s required. Differentiation even in terms of HR practices help them get closer to being the best in league. Talking to 4Ps B&M, Ajay Kaul, CEO, Domino’s Pizza India Ltd. (that features in the Top 20 of Hewitt’s best Employers in Asia 2007 list) asserts, “By making your organisation a great place to work in, work efficiency improves as well...” Kaul further explained how Domino’s takes up initiatives like celebrating the birthday of employees to treating all employees with equal dignity; all to ensure that their employees are satisfied.
Arvind Agarwal, Group President, RPG enterprise, on the other hand feels that attention to employees’ career development is more crucial for maintaining levels of satisfaction. He remarked, “Career development too plays a crucial role in making any organisation an employer of choice and that is what RPG believes in...” Then there is Arun Kumar, VP, Godfrey Phllips India (GPI), who stresses on training as he says, “T&D is taken up as the priority issue here and as a matter of fact carried out at three different levels.” GPI also considers the mentor-mentoree relationship vital.
From scanning management groups to travelling across the world, companies are trying everything they can to emerge as a winners. And today, times have become so testing that simply pay and other hygiene factors no more solely decide a company’s human capital base as Ashok Ramachandra, Senior VP-HR, Tata AIG Life Insurance voices, “In an industry where people are getting 100% hike on switching jobs, only good HR practices can help (companies) retain talent in both the short and long run.”
LG on the other hand holds a belief that employee welfare coupled with performance oriented culture helps them in keeping a check on their attrition figures. Yasho V. Verma, Director HR and MS, LG adds, “Performance at LG is something that is sacrosanct. The rest is taken care by the company.” LG spends as much as Rs. 90 per day on each employee’s meals alone, small thing really, but that is just one thing that LG takes care in terms of hygiene factors; the rest includes sending employees along with families to attend training sessions. Surely, many roads to the same destination as you may have figured out. With the employees on centre stage, the role for HR officials is getting tougher for the day. ‘No compromise’ in efforts to have the best human capital is the key to it all!
4Ps edit bureau, with inputs from Surbhi Chawla
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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