When the revenue is plateauing, see how specific CEOs are. They talk about market conditions, customer decision making, and regulatory constraints. They offer an improvement time horizon, usually 12-18 months.
However, when it comes to attrition, the same CEOs say, “Yes, it is increasing. We are rolling out measures to curtail it”. Typically they refer to some salary increases, promotions and feel good events. If the crisis is acute, a communication blitz is also planned. Unlike business, there is no time horizon shared.
What if a CEO says “Our sales will improve, as we are hiring 100 more salespeople”? That is because he/she knows that is just an approach, not a solution. Why should it be any different for people?
First of all, attrition does increase, when the industry rate of growth increases. Market demand is more and so more people leave. Typically the spike adjusts itself in a couple of quarters.
One big change in entry level workforce is the shift from large campus numbers to a balance across entry level hires with experience and campus. More need for people with some experience, higher the attrition.
Running very large services organizations has its own challenges. Often the programmer ends up feeling like a victim of forces larger than himself/herself. To an outsider, some of the constraints look comical, but they do exist. Check out this video (in Hindi) to get a feel of an average engineer. Life of an average engineer
Market has become more competitive. So, companies end up taking tougher assignments at lower prices, assuming that they will somehow find a way to execute. Often, the execution is at the cost of quality of life. With Agile methodology catching on, the pulls and pressures on individual contributors is higher than ever.
At the same time, the work content itself has become routine. Tools and frameworks, sometime allow engineers to download chunks of code directly from the internet. Challenge is not from content, but from timelines, quality of build and lack of control on domain, technology and location.
Imagine going to a restaurant with friends. Also imagine that the host, instead of appreciating the food and conversation, pulls out a checklist and starts tracking the time taken to serve soup, appetizer, main course and the time taken to finish it! Sadly, we have groomed a generation of project managers who are very good in tracking progress but do not relate to the joy of leading/ managing to an outcome. HR relies heavily on them to engage with people, delivery wants them to deliver on time and finance expects them to meet their numbers. What gives?
In a large, depersonalized environment, employees are more and more keeping trust in their peer group. Outstanding leaders are able to get followers, but average ones are unable to cut through the strength of peer group networks.
We follow a normal distribution for appraisals and benchmark against market median. Automatically, pockets of attrition are created in companies. When demand is high, every employee who has been placed at Q25 seeks and gets an opportunity at another company at P50, that gives a 20% premium on his/her current salary. So, A hires from B, B hires from C and C hires from A. All of them are bringing up the salary of people at P25 of their competitor.
I do not want to paint a pessimistic picture. It is possible to engage with employees through all this. However, each activity creates a limited bounce in engagement and nothing more.
- Big event, communication dos: Feel good for 2-3 days.
- Salary increases: Feel good created by the increase is offset by adverse impact of normalization.
- Promotions: Promoted people feel good; others?
In the short term, attrition can be moderated only by growing the headcount. Any action taken based on a performance rating has a limited impact, as that puts off people with lower rating. If you have money to throw at the problem, will be good to learn from Google’s experiment.
Another major POPS finding concerned how to give an employee more money. In 2010, buffeted by the recession and increasing competition from other companies (especially Facebook), then-CEO Eric Schmidt decided to give all Googlers a raise. It was the job of POPS to determine the best way to offer that increase. The group ran a “conjoint survey” in which it asked employees to choose the best among many competing pay options. For instance, would you rather have $1,000 more in salary or $2,000 as a bonus?
“What we found was that they valued base pay above all,” Setty says. “When we offered a bonus of X, they valued that at what it costs us. But if you give someone a dollar in base pay, they value it at more than a dollar because of the long-term certainty.” In the fall of 2010, Schmidt announced that all Google employees would get a 10 percent salary increase. Setty says Googlers were overjoyed—many people cite that announcement as their single happiest moment at the firm, and Googlegeist numbers that year went through the roof. Attrition to competing companies also declined.
(Full article here.google_people_operations_the_secrets_of_the_world_s_most_scientific_human.html).
But not every company has Google’s cash. An across the board increase might result in a number that satisfies no one! So, one need to indulge in some short term activities and be busy.
However, companies also need to create their own analytical capability so that their CEOs sound convincing when talking about attrition and take a point of view. Appreciation of increase in jobs in the market, locational distribution of headcount, cohorts’ analysis, appraisal stability ratios and compensation inefficiencies will all help.
hr3by2 