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Webinar on Employee Retention – Measures & Strategies

29th March, 2012

Structure

1. Mathew Kuruvilla

-- Understanding Employee Turnover in India

-- Retention : A “Systemic” Solution

2. Mervyn Raphael

-- Real time challenges in Employee Retention

-- Some best and next practices in Employee

Retention

-- How to evaluate retention program effectiveness?

3. Question & Answer

Slide 2

What are organizations grappling with?

“Double digit attrition rates hurting

Indian businesses….attrition costs

three to four times of an individual’s

salary.” - Bruce M Stewart, Deloitte Global Services Line

Leader

“Indian ITES firms tackle

attrition >35% on an annual

basis…” - The Economic Times August 2011

“India and China are regarded as the

future…consequently, multinationals

are scouring these countries for local

talent.” - The Global Talent Index Report,: Outlook to 2015,

The Economist & Heidrick & Struggles

“56% of employees in

India believe they must leave their

organization to advance to a better

job. Comparative figures: US 43%

U K 41%China 38 %…” - Towers Watson’s Global Workforce Study 2010

Slide 3

No Labor

Shortage

Emerging

Shortage

Labor Market

Under Pressure

Workforce

Specifications

• No labor shortage

• Low mobility

• Tenured

• Preference for public

service

• Increasing labor mobility

• Increasing recruitment cost

• Shorter tenures

• No-poach agreements

• Shrinkage of labor pools

• Over dependence on colleges

as labor pipelines

• Ability to negotiate opportunities

• Volatile talent - constantly on the

lookout - devoid of career focus

Retention

Drivers

• Recruitment key

• Lower turnover preferred

• Equity key driver for

employee satisfaction

• Lifetime loyalty factor

• Retention business case driven by

productivity & Opportunity costs

• Efforts to communicate value

• Beginnings of focus on top

performer identification & retention

• Line Managers willing to pitch in

• Extending tenure vs

lifetime loyalty

• Focus on employee engagement

• Reduce opportunity losses and

replacement costs

Staffing

Challenge

• Limited Talent Pool

• Stagnating labor pools &

markets

• Tolerance for mediocrity

• Low trust levels between

employer & employee

• Staffing an operational priority

• Turnover starts challenging stability

• Wage inflation begins

• Workforce quality starts suffering

• Quality leadership & Managerial

talent shortage

• Depleting organizational

knowledge

• Near fit capabilities

Indian labor dynamics Retention not

a key HR

priority Economic

Reforms

Rise of the New Economy

Businesses

Focus shifts to

Retention

Retention

Embedded in

HR Strategy

Slide 4

Getting the basics right – employee engagement & organization performance

Organization Performance

Discretionary Effort

Desire to Stay

Employee Engagement

Slide 5

Top turnover drivers in India* •

• Job Characteristics

• Leadership quality & poor people

management

• Total Compensation not competitive

• Work environment & work-life balance

• Inadequate career advancement

opportunities

• Inadequate personal development

opportunities

• Relationships at the workplace

• Individual characteristics

Bottom-line:

• Poor Alignment of employee with job

• Dissatisfaction with the opportunities &

practices adopted by the organization

* Source: research reports from Towers Watson, Corporate Executive

Board, Heidrick & Struggles

Slide 6

Sharper Diagnosis Needed

Employee Focus

• Performance turnover – top 25%

• Top talent attrition

• Turnover of low performers

Organization Focus

• Benchmarking employee value proposition

• Hard to hire positions

• Key skills

• Organization design & structure assessments

• Employee surveys, pulse surveys, focus group etc.

External Focus

• Attrition to direct competition

• External factor analysis

• Benchmarking HR products & practices

• Industry trends or regulatory changes

• Post Exit Surveys

• Employee relations audit

• Manager sensing data based on

defection risk

Slide 7

Most appreciated elements of EVP*

Working for respectable organization/ organization stability

Type of work/Job interest

alignments

Training/ development opportunities

Base Pay/ compensation

Career advancement/ opportunities

Bonus or

other incentive

*Based on three different Studies by Mercer, Towers Watson &

Corporate Executive Board on Employee Value Proposition (2011).

Flexible schedule/ vacation/holiday/

paid time off

Are Employers aligned to the

employee view of the value

proposition … does it remain

compelling?

Slide 8

Integrated Retention

Strategy

Recruitment

Benchmarked Total

Compensation Practices

Career Advancement

& Personal Development

Leadership/ High Quality

People Management

Practices Robust

Performance, Talent &

Succession Management

Work-life Balance

Workforce Planning & Role/Job

Alignment

Culture & Relationships

Embed retention into

business strategy & Manager outcomes

Assess levers for inter -

linkages & relative impact

Focus on organization

culture & assimilation of

HR practices

Employee Value Proposition – an Integrated Retention Strategy

Sharp focus on future career opportunities, compensation, Devpt

opportunities, job alignment

Slide 9

Executing a “Systemic” Solution

Diagnose

Design

Implement

Assess

Sustain

Assess Measures

Sustain

Design & Implement

Assess Levers

Prioritize

Diagnose

Slide 10

Watch out for Line Manager response to your proposals !!

Slide 11

Structure

1. Mathew Kuruvilla

-- Understanding Employee Turnover in India

-- Retention : A “Systemic” Solution

2. Mervyn Raphael

-- Real time challenges in Employee Retention

-- Some best and next practices in Employee

Retention

-- How to evaluate retention program effectiveness?

3. Question & Answer

Slide 12

Retention Is Not For Everyone

Source: Dibble, Suzanne. (1999). Keeping your valuable employees—Retention strategies for your organization’s most important resource. New York: John Wiley and Sons. Inc.

The challenges that confront managers are not only how to minimize the

possibility of losing good employees, but also how to identify the employees an

organization needs and wants to keep.

Slide 13

Current Challenges

Individual Imperatives

• Career growth increasingly about variety of exposure: cross-function, cross-industry, cross-geography

• Increased connectivity leads to employer consideration set becoming more global

• Generational shifts leading to shorter time horizons for “staying” in an organization – organizational “loyalty” getting redefined

• Peer comparisons becoming more of an influencer due to increased connectivity on various social platforms, employees constantly looking for “greener pastures”

• Emphasis on work-life balance, in contrast to organizational requirements – mismatch of career anchor with organization/role

Organizational and Industry Imperatives

• Accelerated growth of people managers to senior management, due to exponential growth of some sectors

• Organizations in the same domain are scrambling for the same talent, with no perceptible differentiation

• Dilution of ethical hiring practices, due to the need to “make the numbers”

• Acknowledging and actioning on the critical role of the manager in retention

Slide 14

Retention Practices

Rewards (Monetary)

Non – reward programs Individual Level

Organizational Level

Culture

Policies & Procedures

Long term interventions

Slide 15

Retention Practices at Individual Level

Rewards

Employee of the Month

Spot Recognition

Recognition Leaves

Lunches/dinners with the

leadership

Stretch assignments for

high potentials

Employee Engagement

initiatives

Building managerial

capability for handling

people

Bonus

Performance based

incentives and

increments

Long term rewards like

ESOPs

Continuing Education

program

Deferred Compensation

Retention Bonus

Profit sharing

Sabbaticals

Paid vacations with families

Individual career growth

Variety of career options

across functions and

geography

"WOW Hours" (time off

awarded to employees who

go above and beyond)

Non – Reward Programs

Slide 16

Retention Practices at Organizational Level

Culture

Implementing a unique

Employer Value

Proposition

Clear Brand signature

practices

Telecommuting

Building practices

around employee needs

Employees-only online

networks

Fun @ Work: Recognize

birthdays/anniversaries/

retirements/promotions

Policies & Procedures

Empowered Teams

Culture of ownership –

Feeling of “My own

company”

Building a culture of trust,

transparency, and

openness

Continuous feedback to

and from employees

Autonomy and freedom

Being socially

responsible - engaging

in community efforts

Involving people in planning

and taking decisions

Flatter structures – leading to

faster communication and

quicker decision making

Career Lattices for improved

employee development

Customized career path

based on employee life

stages

Long Term Interventions

Slide 17

Some Examples Unlimited tuition

reimbursements for job related educational expense Introduced new global

women’s theme - Defining success. Your way Social Security systems for all its employees

Rigorous leadership development program for senior managers Deferred Compensation program for young leaders

Active contribution to community – social responsibility is one of their core values

Pay Exception: Allowing manager to give pay increases beyond normal policies

"Rotating Officer Program,“ where every bank sits on board meetings CEO has lunch with his employees on most days

Customized career options for employees based on their career stages Now follows a continuous process of appraisal rather than a yearly

process Every employee to be moved to a different role/function/ geography every 2-3 years

Slide 18

Slide 19

References High attrition rate hurting India: Deloitte; Rediff.com, May 3, 2011.

Attracting & Retaining Critical Talent Segments: Identifying Drivers of Attraction and

Commitment in the Global Labor Market; Corporate Executive Board, 2006.

Inside Employee’s Mind : Navigating the New Rules of Engagement, Mercer, 2011.

Towards a Sustainable Rewards and Talent Management Model, Key Insights from

Towers Watson’s Global Talent Management and rewards Survey, Towers Watson,

2010.

The Global Talent Index Report ;The Outlook to 2015; Heidrick & Struggles & The

Economist Intelligence Unit, 2011.

Redefining Careers in India; Richa Gulati & Shatrunjay Krishna Towers Watson,

December 2011.

Retaining Talent; A Guide to Analyzing and Managing Employee Turnover; David G.

Allen, SHRM.

Slide 20