Creating Peace In Times Of Turbulence

One factor to be kept in mind to counter the problem of high attrition rate
is not to follow the herd mentality. A strategy that one organization will adopt
to reduce attrition may not be applicable for the other owing to the varied
nature of business, cost structure, customer profile, avenues for upward
movement of employees.

Ever since the BPO boom started in India, there has been a growing concern
among the IT companies about employee attrition rates. Smaller companies were
losing and still continue to lose people to the bigger outfits. The promoters of
these companies can probably draw consolation from the fact that bigger
companies too face similar problems amongst themselves. So what does one do
about it?

Well, each company is already trying to do something that it deems is fit
for. I was once interacting with the head of a software development company. The
company could be categorized as an SME in its industry. He was not willing to
make any investments in training and developing his people's assets as an
employee retention strategy. "What's the point?" he said. "I
will only be training them for someone else! First I develop the employee. Then
he starts feeling that he can quickly encash his new skills somewhere else and
leaves. The whole investment is a waste." I am sure a lot of entrepreneurs
in the hardware industry too would have similar views; and that a lot of others
would not subscribe to this point of view. So where do we go from here?

THINKING INDEPENDENTLY CRUCIAL

The fact remains that there are no right or wrong answers. Many times, in
our exuberance to solve a problem, we rush into adopting solutions that we have
heard are working for someone else. Or it could just be the 'in' thing to do
just because everyone else seems to be adopting it. The important question to
ask is if it will work for me?

No two organizations are the same. So what works for someone else, may not
work for me. In arriving at our own employee retention strategies, factors like
organization culture, nature of business, cost structure, customer profile,
avenues for upward movement of employees, rate at which the operation needs to
ramp up to meet customer demands, and even general market conditions may need to
be evaluated. Needless to say that each of these factors could point to the
adoption of an approach different from that of another company.

'ESOPS' GAINING GROUND AGAIN

Retention through Employee Stock Ownership Plans (ESOPS) was a great fad at
one time. It was touted as the panacea that would rid companies from the plague
of attrition. It is also a great example of how an inconceivable factor for many
such as the state of the stock market could determine the fate of seemingly
unrelated activity of employee retention measures. As long as the stock markets
favored the stocks, things seemed hunky dory and everybody sweared by ESOPS as
the greatest employee retention ideas of all times.

However,
when the markets went into a slump, the same scheme failed to enthuse employees.
Some organizations even scrapped the scheme. Now that the stock markets have
been on a dream run in the recent past, one again hears of companies reviving
the scheme. Are these companies fickle minded? Maybe not. The message simply is
that one needs to remain flexible in one's approach and not get married to
something or divorce from it just because it worked or did not work at a
particular point of time.

Business cost structure is another key element in determining an appropriate
response to combat attrition. This is also intricately linked to the perceived
value of the services provided by an organization.

THE FLOURISHING BPO MARKET

Overseas companies off-shoring work to India are no longer willing to, or
cannot afford to let their employee costs increase. Compared to revenues, these
companies have reached the peak of their employee costs and therefore do not
wish to effect further increases. They have therefore decided consciously to let
employees go. Would we say that these companies are not employee-oriented or
people-focused?

However, the Indian companies to whom they outsource their services are
currently in the same situation that they were in several years ago. Compared to
the revenues, the Indian company's cost structure and people-related cost is
at substantially lower levels. So these companies can afford to pay more to
people. Since there is an opportunity for more business, they are even willing
to pay more to people and work at marginally less profits in order to grab a
bigger share of the pie. In that sense, they are already heading in the
direction of the problem that their US counterpart faces today. And since the
need to ramp up business instantaneously is very high, they are willing to pay
more for 'ready-made' people. This creates an upward spiral of rising people
costs as employees keep rushing to areas of greater demand. The problem
therefore is not whether I am affected by this phenomenon, but at which stage in
this 'problem spiral' do I lie?

BASIC QUERIES

At any point of time, there would be organizations at the bottom of this
spiral as well as at the top of the spiral (and of course, everywhere in between
these two points). Where do I lie? The lower on this spiral that I am, the more
vulnerable I am to people's exodus. So what's the solution?

Can I create a value for my services for which customers are willing to pay
higher differential prices? Can I offer services that others cannot or have not
yet thought of offering? If I get paid better, I could also sustain paying
better. Can I create a cycle of innovation or improvements, which keeps me
ahead?

The challenge here would be to be able to develop selection criteria which
matches the candidates' competencies / attitudes to the job requirements and
organization culture so that the employee is at 'peace' in his environment.

Sumeet Sharma is VP, HR,
and Head of Training and Consulting Business at RT Outsourcing Services.