ATTRITION: THE TICKING TIME BOMB IN INDUSTRY

An article that featured in the Economic Times today

Attrition is a complex, cultural and leadership challenge with no easy answers. 

In 2012, according to HR consultant Towers Watson, attrition in India was 17%, higher than the 11.2% salary rise. At this level of attrition, an organisation in 2020 will have only 22% of the employees it had in 2012. The salary rise in 2013 is expected to be 12.4%; attrition will be higher. 

Attrition is at all levels, more in junior customer-facing jobs. Attrition in the banking, financial and insurance sectors was 30%, in IT services 28%, retail and consumer goods 16%, retail store-level 30%, healthcare 10% and hi-tech 14%, according to the report. 

What is the impact of high attrition? It erodes consumer loyalty, hurting brand reputation. High attrition creates a vacuum at middle-management, which should handle execution.Attrition creates a middle management that’s tasted neither success nor failure. Weak middle management delivers faulty, corner-cutting processes. It forces senior management to work a level lower, forsaking the bigger picture. A weak middle management means poor mentorship of entry-level managers, hurting long-term leadership development. 

Why do we see high attrition? The first is economic; new industries open up when GDP grows faster than 5%. Talent in established industries is raided to staff newer industries. FMCG is the talent bank in India, funding telecom, retail, health and entertainment industries. The next reason is “hurried aspiration.” Everyone is in a hurry to be a young vice-president or a CEO, to own the latest car and television or to take that exotic holiday. This forces people to take risks with their loans, and anyone with an EMI payment greater than 25% of his takehome salary is constantly in the job market, to reduce that to below 10%. Hurried aspiration is fuelled by average headhunters who create insecurity and peer pressure by transacting CVs between managers and firms. Performance evaluation is loose and incomplete, based more on potential and less on merit. 

What do Indians value at work? The top five factors are: job security, career advancement, base pay and title, learning and development, and the reputation of the organisation. A company must grow. If it doesn’t, people leave. Learning and development is the Achilles’ heel in India. Companies do not invest much in training and developing talent: this is the first reason quoted by exiting employees. The cost of training and development is minuscule, but it is the first item cut in tough times. On-the-job learning from leaders is something young people value. Leaders in India must coach young employees; this will lead to higher engagement, better performance and lower attrition. The world will see a talent shortage by 2021. The US, Canada and Europe will see a deficit of 12 million people to fill roles. India with 2.1 million, Indonesia with 1.5 million and South Africa with one million will be the top three countries with a talent surplus by 2021. 

This is an opportunity to develop global leaders. Culturally, we need to change. We should value contracts, which we don’t do today. Our contracts are social in nature and less legal or economic. Employees will need a moral compass of right and wrong: joining competition, refusing to join a new firm at the last minute, burning bridges and so on. Companies will need to be flexible, using innovative policies for women, building alumni networks and designing customised career paths. Firms must differentiate on merit early to keep top talent. They should build a stronger middle-management pool by rewarding those who stay. Senior leaders must engage, coach and grow talent. Firms should start learn-andearn internships. Companies are good at identifying the needs, wants and desires of consumers; they should identify the needs of their employees. Finally, young managers must realise that a good career is a 20-year journey. If they do not develop strong general skills and industry competence, younger and less-costly managers will substitute them. A rolling stone career strategy is a short-term success and a long-term liability for individuals and companies. Are you worried about the long term? 

- The writer is former chief of emerging markets, Nokia

Given the crisis on hand, Organisations will have to pay attention to:

1.       What are the specific reasons for which employees are leaving?

2.       What should they do to address these reasons?

AceNgage with our yXit offering has over the past years assisted several Organisations in identifying & understanding root causes of Attrition. We now also work with Organisations on building & implementing action plans to address employee concerns.

When the going gets tough...

The economic situation is not good; the govt is at its weakest, gold prices are dropping, sensex tanked after RBI announced the much awaited steps to revive the economy. In general, it does not paint a pretty picture.

The signs are pretty clear, our Country along with the rest of the world is going through a phase where Companies will struggle to attract new clients and post high levels of profits.

In these times it’s extremely critical that organisations do a few things right.

eNgage:

This isn’t the time to stop engaging; in fact it’s important to do it much more than before. Some companies prefer to keep the bad news within as they are not sure how employees will react. It’s important that the organisations actually share with the employees where the company is heading and what the employees need to do, to make the situation better, No organisation can hope of better performance by not involving the employees. Engagement Surveys, Open Houses, Skip level meetings, Focus group sessions, Floor walks by Sr. managers have to be done with rigour and enthusiasm.

Take care of the ME’s

There is always a lot of attention given to the Bottom Performers, either to help them perform or to warn them of dire consequences if they continue to underperform. Similarly top performers get a lot of rewards, appreciation and several pats on the back. It’s the ME’s (Meet expectation) who go unnoticed. They come in to work diligently, do what’s expected of them and quietly leave without too much pomp and show. They are the ones who organisations need to pay attention to.  If the ME’s can outperform it translates to a significant impact on the overall performance as they form a big chunk of the total split.

Review Performance

This is a perfect time to review the performance of each of the team members, understand how each one is performing and see what support can be provided. Get into the habit of conducting performance appraisals on an ongoing basis, and not only at the end of the year to force fit them into a bell curve.  Training needs have to be identified and employees should be given specific Coaching. Make best use of the time. The last thing that Companies should do is to slash the training budget, this will be suicidal!

Get Creative

“When the going gets tough the tough get going” This is not the time for Managers to be sitting around and strategizing without any concrete action. They should get out of their seats, walk out of their cubicles and take ownership. Listen to employees, get to know the pulse of the team members and deploy solutions. Sometimes the most creative ideas can come by listening to colleagues, team members and friends.

To bring about a change you have to do things differently. Nothing is going to happen by itself  !! 

listen...

Its been a while since I last wrote and I can now see why I find it difficult to discipline my 3 year old :-)
AceNgage recently celebrated its 3rd birthday and one of the biggest lessons I learnt was to keep my eyes and ears open to what Customers say as that will always keep me in sync with what they want. It goes back to what my Dad always said about how to talk less and listen more, no matter how hard I found that.
One of the biggest challenges that most of us face today is that we just dont listen enough. My colleagues in the past have even managed to blame this as a 'cultural' issue. The excuse was that people who interrupt and dont listen ,do so because they know what the speaker is getting at and dont need to listen to the rest of what he has to say !!
I recently saw a Bollywood flick where the heroine loses her eyesight in a road accident, while I will refrain from commenting on the movie, I cant help imagine how difficult it must be for someone to manage his/her day to day life without being able to see. But they manage, and they manage because they listen a lot better.
Employees are giving us signals all the time verbal and non verbal , and if we as Managers paid attention to what they were saying wouldnt be a lot more effective ?
You could stretch the idea to your personal life too, with our family , friends and pets ....

Bye Bye 2009

I wonder what 2009 will be remembered for, or will people even want to ever remember it .We at AceNgage too, had our ups and downs, more downs that ups, predictably.


Through the year I met a lot more HR heads than in the previous year. I would joke with them, that earlier they had the money to spend, but not the time, now they have the time to spend and not the money.


On a positive note, it helped us to sit back and strategise and look at what our Customers want. We then went back to the drawing board and tweaked our services and in 2009 launched our "Coaching For Manager program" & "Counselling services to Employees". Both of which have been received by our Customers well.


We are also launching our new website and I can’t tell you how excited we are about it. Hang in there and very soon you should be able to view it .