Transparency in Employee-Manager relationship improves retention

The more transparent it is, the more healthier it will be. In any relation being transparent requires trust and vice-versa. Being transparent and trustworthy to your employee improves retention directly. This avoids a lot of wrong things like false promises, being biased etc and brings a lot of good things into picture improving the retention. This factor has a good weight in improving retention.

Attrition when observed at an atomic level in the organisation, Employee-Manager relationship plays a vital role.A Manager is responsible for the attrition of his employee. A Manager should try to probe the reasons given by the employee for his resignation. The employee might not put the right reason with clarity, thinking that it is of no use to put the right reason in front of his manager. Then, the manager should not accept the resignation straight away or with little effort to know the reasons. Instead, it is his reponsibility to know the right reason and see what can the organisation do to retain him. It is very vital that the manager will not play safe and ignore the issue. Even if the HR policies of the company make the employees adhere to this system, it still depends on how well the system is put into effect. For an example, two same reasons given by two employees, one being genuine and the other not, the system cannot distinguish the genuinity of it; it is upto the Manager to handle this effectively.

Why only Manager?
Manager is the bigger player here, because the employee looks for stability. During this phase, the employee is loosely bound with the organisation and will look for stability anywhere in the market. This is why I stress it is the responsibility of the Manager, to see that the employee finds his comfort staying in the same organisation. This will happen effectively if the relationship is transparent to some extent, in case of which you can make him spend some more time with the organisation which might help in a change in his decision.

Cost of Acquisition is higher than the Cost of Retention.

In most of the cases, at an organisation level, the cost of acquisition is higher than the cost of retention. At an organisational level, attrition costs a lot to the company. It adds a lot of costs like recruitment, skillset training, domain training, time for on the job skill development, losing resources to competitors(poaching). It is always present in IT industry, and that is business.

I believe there is lot of unnecessary attrition than what actually it has to be in this industry. I say it as unnecessary attrition, thinking from employer's end, atleast it should be 4-5% less than the actual figures. It adds to a lot of corporate costs, especially in an employee-intensive organisation.

The NASSCOM–Hewitt Total Rewards Study

IT and ITES organizations have been in a high growth phase in the last five years and have increasingly experienced flux and instability. Progressive organizations in this space are using comprehensive, efficient and cost effective HR practices to combat the business and HR challenges faced due to the stupendous growth that the industry has experienced.

Statistics validating this fact can be found in high annual salary increases (reinforcing the business growth and challenges of attraction and retention of talent), high levels of attrition and constantly evolving innovative HR practices (hiring, performance management, career management, etc.) in these sectors.

Annual Salary increases in 2007 were as high as 14.0% and 15.0% in IT and ITES respectively while projected increases for 2008 are also expected at the same levels. Attrition in these sectors is as high as 25%.

With India's burgeoning role in the global IT & ITES landscape, people will be the key value differentiators that organizations may have to offer to their client. Hence it becomes imperative for organizations to attract, retain and motivate the right talent.

To achieve the same, organizations must offer a distinct value proposition to successfully attract talent. The right mix of culture and HR practices contributes to the above in a big way. Compensation is most certainly a key driver in such situations.

The NASSCOM–Hewitt Total Rewards Study addresses this need of the Industry and provides a more holistic approach to Total Rewards and People practices adopted by the best in the Industry. It enables organizations to determine how effectively their practices are aligned with the market and business.

Employees having 2 to 4 years of experience switch the jobs more.

Let us study the career path of an IT professional in general. Generally, people start their first job in IT industry, work for some time and look for a change afte some time. So, if you look in this way, change is triggered by a requirement. Change is an attempt to satisfy that requirement, where the reason could be...
1. Money
2. Job Satisfaction
3. Career ambition
4. Further education
5. Problems at workplace
6. Promises made by the company were not done.
7. Location preference
8. Time + Money*
9. Lack of recognition
10. I change because people around me change
11. Don't know, not because of atleast one reason above*

'Attrition is the only constant' - Why a constant?

Attrition is probably the major concern for the IT industry. The ASSOCHAM (The Associated Chambers of Commerce and Industry of India) has released its Business Barometer Survey on 'Attrition Problem in a Growing Economy'. The study reveals an alarming 40% attrition rate in the services sector against 20% in the manufacturing sector.

Are you one of those people who is working in some IT industry, having made a couple of job changes or thinking of a job change, then answer the questionnaire below.

Questionnaire