Feature

Why retention strategies often fail

Salary and perks are not the only factors that make professionals switch jobs. Renuka Vembu analyzes the causes of attrition, the efforts made by organizations to retain their talent and why these retention strategies do not always manage to hold on to the talent

Salvaging the talent pool is a tough task for companies and HR departments alike. However, this is an inconvenient truth in the stark reality of attrition versus the desperate efforts of retention. Any organization suffers when the most efficient and valuable employee decides to part ways—be it the top notch or lower down the ranks, they create a vacuum—either for the company in large or in their immediate frame of surroundings.

Employees are said to be a company’s greatest asset. Attracting, safeguarding, nurturing and preserving them is a mission in itself, which takes total commitment and endorsement. While the middle management has a career chart well in place to take on the next position, the top hierarchy has a contingency plan laid firm. It is the group which is lower down the ranks for whom there is no succession planning strategy in place, and who comprise the volatile lot. They are easy targets of poaching in the competitive talent market.

Reasons to resign

Akila Krishnakumar, COO and Country Head (India), SunGard, felt “Most often the decision is not compensation related, but because an employee finds an ‘apparent’ right opportunity elsewhere; apparent because this impression is based on the candidates’ understanding of a new role from the first few interactions with the other organization. Therefore, what works best for employee retention is to ensure that employees have a good connect with their team managers, who can guide them towards meeting their individual aspirations within the same organization, help interpret in-house opportunities, demystify their apprehensions, and in general, be the connection between the organization and employees on the ground.”

In a globalized marketplace and 24/7 job function, it is imperative to stress on connecting on a personal level with employees. While on the job, lack of communication, absence of timely recognition and compensation, conflict with team members or boss, insufficient perks, promotion and pay package, inconducive environment, incompatibility with the culture, work ethics, inflexibility in the work timing, insensitivity with individual health problems or personal issues, etc., may act as some of the reasons which force the best players to search for better options.

The main issue is to identify why employees leave—is it with respect to a particular team or department, a specific job function which is high pressured, a reporting manager or are there generic issues which need to be addressed.

Vikram V Kallianpur, Director, HR, Virtusa Corporation, said, “It is the effect of multiple causes covering engagement, growth, culture (workplace as well as performance), and the people-touch each people manager practices in the organization. The analysis paralysis comes with reasons such as career advancement, compensation, family constraints, relocation and academical pursuits. The actual ‘drivers’ of attrition can stem from lack of goals or reviews, low employee-manager engagement, culture contrary to values, delayed reward and recognition, conflicting communication (including feedback), interpersonal failures, etc.”

TMI Network gave a different perspective. They opined:

• There occurs space crunches as one moves to top of the ladder, where one peer makes it to top and the subordination issue creeps up
• Bringing a new boss in between
• Professional freedom ceiling—one may hit the ceiling of growth and they may look for larger companies to get more space to grow
• Re-organization

Retention strategies

While average performers can be replaced, the Herculean task is finding a replacement for exceptional performers who leave an organization. Companies are increasingly engaging in retention strategies which are gaining prominence, and are as important as recruitment and training. Retention plans need to be phased out bearing in mind not only the job requisites of an individual, but the surrounding environment as also gaining an insight into an individual’s personal life.

Iti Kumar, A.V.P. People Development, GlobalLogic Inc., voiced, “Management of the company must ensure that effective retention strategies are well practiced at both strategic and day-to-day levels. HR strategies must evolve from a transactional support role to partnering in the organization business strategy. HR needs to take steps to be aware of employee problems proactively and try to solve them creatively. Valuable employees always consider themselves to be brand ambassadors and stakeholders; therefore it is really essential for the management to provide long term strategy and vision.”

Venkatesh Subramanian, VP and Head, IT Careers, TMI Network, believed that amendments in the form of compensation correction, both in salary and benefits like stocks, role betterment, group movement like reporting to another boss, promotion and location movement, even onsite posting will help resurrect the situation and retain dissatisfied employees.

Angelo Apollos, Director, HR, CA India, explained, “Designing jobs and assigning work which is challenging, providing a framework where employees can access relevant development opportunities, a robust mechanism to promote internal career opportunities, flexible work policies, family-friendly services and benefits, strong lifestyle-oriented benefits, well defined career paths backed up with the requisite training, a well articulated and evident corporate and social culture, a respected brand name, these are the many reasons why employees would be proud to be associated with a company.”

In an age when needs far exceed the expectations met, and when monetary benefits is no longer the only cause of concern, the intangibles and add-ons that come with the surrounding environment act as a motivator on the job. Effective leadership is another key aspect for keeping the young breed motivated and shaping up their careers. This keeps them on track and in focus; satisfied with the work and happy to be working where they are cared for and valued by.

Ulhas Aher, HR Head, Datacraft stated, “There is no unique and uniform solution or tool for retaining employees. They say that different strokes for different folks. Different tools are used for different factors and it is not necessary that it will work for everyone.”

For employees to stay motivated and dedicated, and perform to the best of their ability, engaging in fair and transparent dealings, an effective communication channel, job rotation, ensuring a challenging role, an open-door policy, a defined career path, proper training and skills upgradation, addressing grievances, inclusive decision-making, employee empowerment, effective performance management and appraisal, are mandatory. But, these are a given under any circumstance and stand as the basic requisites. It reflects the culture of the company, its brand identity and the quality of its workforce. They have to move out from just being a publicity mechanism or a policy on paper to more diligent implementation for the overall betterment of the organization and its workforce.

Pratik Surana, CEO, Quantum Infotrainers and Consultants said, “There is always an urge for learning amongst human beings and any good cross functional training could make an individual feel important in the organization when nominated for such programs. It also helps in refreshing their skills which could not be exploited or unleashed to the fullest potential. People may have various aspirational levels at various stages in life, be it money, status, position, recognition or love needs or a combination of it makes them look around for an effective alternative.”

What employees need and demand, and companies are increasingly trying to adopt are innovative ways to not only make employee life easier but also to enhance it. Since there are increasing health concerns even from a very young age, medical benefits are of utmost importance. Similarly, in an age where commuting eats up a considerable amount of a person’s time, any arrangement to reduce the traveling woes act as a major attraction. Provision of concierge services reduces the tension of employees to a great extent as additional responsibilities are taken care of by the company within its premises. Employee Stock Ownership Plans (ESOPs) help build up an individual’s financial bank. Educational tie-ups help employees upgrade their skill-sets and thereby give them a better chance in the outside job market and improve their career scope. Flexitime policies and telecommuting privileges are also some of the upcoming ideas that are being tried and tested by companies. Also, in this stress-ridden age and lack of work-life equilibrium, companies engage their employees in career and personal counseling sessions by inviting professionals on a periodic basis. It is often the small things that make a large difference.

Vaidyanathan P, Deputy GM, HR, California Software Company, said that creating a sense of belonging, giving them platforms to work with cutting edge technologies, and cross training expands the role width and gives employees exposure to perform in multiple projects.

An analysis

Retention strategies have to be carefully executed keeping in mind the people involved because it revolves around them. Feedbacks from employees have to be worked upon, and their inputs included in making it a success effort. The huge gap in the demand-supply for specialized skill-sets is still widely prevalent, availability of raw talent far exceeds that of polished skill-sets, educational system lags behind in experiential learning and providing practical know-how. All these hindrances further act as roadblock, affecting the chances of companies to recruit and retain the best available and polished talent pool.

While there is a unanimous view that employee benefit programs and welfare initiatives aimed at retaining the workforce definitely work at one level, the fact is it is not a standalone strategy. They have to be clubbed with other areas as well for churning out the required impact. Krishnakumar felt that strategies worked best when an organization is successful in demonstrating the ‘what’s in it for me’ to the individual employee.

Apollos felt that these strategies worked on three levels—they provide a compelling reason as to why an employee should stay with the company, are great tools when attracting talent and the ROI of these strategies and initiates, if linked to the company strategy, will deliver tangible and intangible business results.

Yeshasvini Ramaswamy, Director, e2e People Practices, voiced out, “Yes, these strategies do help as they drive a high productive culture because the top performers love challenges. The company will benefit as the cost of hiring and slack in the period till the new recruit gets accustomed in the new culture is reduced, hence saving costs. In this era where all employees believe in an average work span of two years in a firm, retaining valuable employees will reflect in their career as it would show their consistency and commitment (reflecting in employee loyalty towards the organization).”

Aher stated, “Attrition to some extent is good for the organization because it gives an opportunity to get new people and new ideas. But, beyond certain point it only leads to losses and negative impact. Cost of replacement is not just the recruitment cost. It also includes the cost of productivity lost, training and learning cost and most importantly it may affect employer brand adversely. When employees stick to the organization they become more productive and in turn get more benefits in all aspects. When people and process are known, chances of failure are minimal as compared to a new organization with new people, new culture and new processes.”

Objective, execution, initiative, endorsement, everything has to be aligned and be in sync for the company to reap benefits of the program. A proactive approach is better than a trying to design a cure at a later stage when the damage is done. This will not only give a dent to the company’s image, but also send out the wrong signal to the existing employees as a damage control effort will seem as a desperate attempt to save face.

The consequences

The consequences of attrition are manifold—loss of business, sulking employee morale and team spirit, impact on productivity, improved and renewed efforts and resources of bringing in a new person on board, etc. Also, it is a known fact that when any employee quits, additional efforts, time and resources are spent on searching for the appropriate replacement, and then molding them to represent the organization, and making them a perfect fit for the defined job role. HR take with them years of experience, knowledge and skill-sets. Apollos added, “Attrition is one of the most significant hidden costs in a business and can amount to as much as six months salary and there are also other costs such as the negative impact to company’s employment brand. When a company loses large or significant numbers of employees it becomes more difficult for that company to attract high quality talent to replace those that have left the company.”

Ramaswamy pointed out that the work environment would be disturbed as the employees may associate themselves with the failure and disregard the upcoming initiatives from the firm. It may also reflect in the business prospects as the firm may not have employees with the appropriate skill set required for the respective job. “This issue is mainly faced by SMEs as sourcing talent at the appropriate cost and time is always a concern,” he added.

A future together

With changing ways of working, the mechanisms to cope up with attrition and retention also vary. Raj Bowen, MD (India), Personnel Decisions International (PDI), asserted, “When the stated and implemented strategy of an initiative is just to retain employees, most often, it fails. There has to be a larger and more evolved purpose that is linked to both—the growth and success of the individual and that of the enterprise. Unless there is a fundamental integrity that seeks to engage a team for building a future together, and the team buys into the dream, results remain suboptimal. At the end of the day, the challenge boils down to that of building effective leadership at every level, as they form the glue that sticks the organization together.”

Similarly, attempts at pulling the strings on employee attrition are not a temporary survival tactic. They have to be substantiated with long-term goals for the employee, as also establishing a credible relationship with them.

Kallianpur summed up, “Organizations that focus on consistently investing in people practices, systems and ‘walking-the-talk’ get the leverage to better retention. Traditional views of staff retention are no longer effective or appropriate in the current talent market. There are no quick fix solutions to staff retention, but being constantly aligned with the people aspect to business enables mapping solutions for problems getting resolved. The senior management commitment to encouraging the ‘people’ function as a strategic partner to business with ‘right funding’ for systems, training and development enables higher people touch which in turn helps in retention.” Making the retention strategy work is one of the greatest challenge for every organization.

renuka.vembu@expressindia.com