Tuesday, August 28, 2007


Job loss is one of the most difficult work related situations that a company and an individual may encounter in the present scenario. Yet, sometimes job loss may also turn into a blessing in disguise. Combining the career literature with the literature on unemployment, the current paper addresses potential positive outcomes of job loss by focusing on specific career adaptability activities that individuals can undertake to obtain these outcomes.

Live case:
Infosys is planning to hire 25,000 people this year. That is almost 500 a week or 100 a day for each working day of the week or about 12 every working hour of the day or about 1 every 5 minutes!

This rampant hiring raises several issues. By announcing that Infosys will hire 25000 engineers this year, they might have satisfied their shareholders. But what message they are sending across to existing and prospective employees? That Infosys is no longer an exclusive club? Can their big bosses anymore claim with any credibility that they hire only the best? However big the candidate pool may be, you cannot find 25000 “best” engineers in a year. The reason why big companies can get away with not so top notch talent is because their processes are so well defined that software development almost mirrors an assembly line. The creativity of the individual hardly seems to come into play.

Last year, attrition rate in Patni Computers was 26%, more than double the industry average of 11% and management is not recruiting any Tom, Dick and Harry. Non performers were asked to leave, and management has decided to revise upwards (in some cases up to 50%) the salaries of their best brains. Profit guidance for the year 07 has been brought down, which is not good news for investors. The reason given is higher salaries. Now this system is in contrast to Infosys and Wipro.
Is it a Blessing in Disguise?
People say attrition is the big bane of the industry. I think it is a blessing in disguise. Following are the main reasons to support my statement:
Ø It helps transfer "people capital" from inefficient companies to the better ones helping the Darwinian cause of weeding out the weak.
Ø The day is not far when Bangalore will get "Vietnamed" just like New York got "Bangalored". Indian companies would need to learn to let go of people. High attrition lets you learn to handle the people risk better.
Ø Forces companies to focus on processes to derisk the people issues better. In a commoditizing business, good processes become a basic necessity not a differentiator.

Good or bad, the fact remains that attrition is a reality and there are companies that manage it well and there are those that do not.

What the companies can do?
An optimum mix of freshers is critical to maintain margins. Typically at least 30-40% of a project needs to comprise freshers (<1>
What the HR can do?
The key measure for a HR professional attached to a business unit knows who would be 'potential attrition' cases and why. The only way a HR person can know this if they interact and hang out with the employees a lot. Knowing the dissatisfied employees and the reasons of their dissatisfaction can result in preventive actions being taken to retain them.Of course, the real driver for this becomes a business leader or manager's desire to decrease attrition. That only happens if attrition becomes one of the measures for how a leader or manager is doing. Many a times when this idea gets mooted by someone from HR, business managers immediately throw up their hands.

"It's the generation they come from". "They only leave for higher salary". "The issue is common to the whole industry". These become the excuses for not linking attrition to a manager's performance. However, if these generalizations are indeed true then it becomes all the more reasonable to make that linkage, to assess who can retain high performing employees better amongst them. And yes, that’s the key! Not merely retaining all employees but managing to retain and develop only the high performing employees.
The vacuum created by the exit of a few senior project managers or a delivery head are routinely being filled by eager second-line managers. More than a conscious risk mitigation strategy, the existence of a ‘pyramid structure’, coupled with aggressive hiring during the past few years has ensured an abundant supply of talent in many of the large organizations. So we are not bound to say that attrition leads to employee loss and in turn the loss of business. However if one is not performing, he/she is bound to go. With a large talent pool, companies are replacing the old generation with the new one which is infact good because it helps in continuous flow of fresh ideas in this knowledge based economy.
And to conclude, I would like to say some golden words:
“If the Indian industry continues to grow, a few large players—especially those that are merely banking on past performances and goodwill—are bound to falter. What would it take to trip the 800 pound gorillas that are merely moving because of sheer inertia?”

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