Monday, December 01, 2014

Attrition a major challenge

Attrition simply means “A reduction in the number of employees through retirement, resignation or death. “Attrition can be conceptualized in many forms; the two prominent forms of attrition for the constraints of this endeavor are attrition due to employees leaving 
Attrition has always been a sensitive issue with firms. Despite offering the highest salaries across all business segments, the industry has been plagued with attrition across the board, particularly in the past few years. This ever-growing wage inflation and attrition rates have put financial pressures on firms.

For a generation used to constantly seeing and adapting to change, "getting bored" will happen quickly and easily. Jobs will be increasingly treated like projects and assignments that workers would like to complete and move on. And they would want to have the option of multiple employment contracts - full-time jobs, consultancy, and project-based jobs to retain them. Companies will have to either cater to these needs or lose them to competition.

It is not easy to find out, who contributes and who has the control on the attrition of employees. Various studies/survey conducted indicates that everyone is contributing to the prevailing attrition. Attrition does not happen for one or two reasons. The way the industry is projected and speed at which the companies are expanding has a major part in attrition. If you look within, the specific reasons for attrition are varied in nature and it is interesting to know why the people change jobs so quickly. Even today, the main reason for changing jobs is for higher salary and better benefits.

Employee attrition rate can be never being entirely eradicated. It can only be influenced to keep it in control. How a company can best retain its staff in a competitive environment is the topmost challenge of HR professionals. When employees leave, it is usually due to either lack of appreciation or due to an inability of nurturing employees according to their skills. Following are some strategies to combat the attrition problem

Some ways to curb the Attrition are:
o   Exit Interviews
o   Mentoring
o   Align Career to Business Goals
o   Strategic Compensation Package
o   Learning and Development

       The current scenario where every organization wants to be at its competitive best, high attrition rate can really act as a threat to success. Attrition is a very serious challenge.
         Especially to rapidly growing organizations. Before it explodes, the organizations should seriously workout strategies to reduce the turnover so that the organizations should not suffer. Organizations planning for the future should be giving close attention to why attrition is occurring in the present.

Attrition is not bad always if it happens in a controlled manner. Some attrition is always desirable and necessary for organizational growth and development. 

                                                                                                                         - Ajeya Krishna

Infosys's attrition rate crosses 20%

Even as high attrition rates continue to haunt Infosys, the country's second-largest IT services firm is confident of bringing it down to 12-14% in the next two quarters as it gets back to the growth trajectory.
The attrition level grew higher to 20.1% in the July-September 2014 quarter as compared to 19.5% in the April-June 2014 quarter and 17.3% in Q2 last fiscal. In comparison, TCS had reported an attrition rate of 12%, while that at Wipro (IT services) and HCL Services stood at about 16% and 15%, respectively, in the April-June 2014 quarter (last 12 month basis). Historically, attrition rates have hovered around the 12-14% range. Infosys made a gross addition of 14,255 employees (net addition of 4,127) during the quarter under review, taking its total headcount to 1,65,411 as of September 30, 2014. Infosys chief operating officer Pravin Rao said.  The firm has already given about 12,000 promotions in April; Infosys had announced a wage hike of 6-7% for offshore employees and 1-2% onsite employees. Analysts had expected the country's second-largest IT exporter to post attrition of around 22% in the second quarter, despite CEO Vishal Sikka engaging with employees, and promoting around 5,000 employees since he took over. Infosys has grappled with rising attrition over the past year, and saw several high-profile exits.

Infosys said it has increased its utilization rate to 75.2% (including trainees) in the said quarter, while that excluding trainees stood at 82.3%. However, most analysts believe that Infosys will be able to slow the exits by the end of the third quarter in December. 

High attrition rates, talent shortage worry recruiters

Talent shortage and high attrition rates are now issues weighing on the minds of recruiters and company chiefs in Asia, as companies expand more aggressively in Asian growth markets.
Nearly two-thirds of CEOs based in Asia told consultancy PwC in a survey they face a 'limited supply of candidates with the right skills'. Also, 47 per cent said they lose their top people to competitors.
In a report by boutique recruitment agency Ambition Group, about half of the 200 Singaporean executive respondents said attrition rates have risen in 2010 and have raised the trend as a key concern.
The tight talent pool comes at a time when companies are looking to expand in Asia. PwC says that nine in 10 CEOs surveyed in their global CEO survey are expecting their operations to grow in Asia, with a focus on China and India.
Gautam Banerjee, executive chairman for PwC Singapore, notes that Singapore is also a strong destination for businesses and talent.
Paul Endacott, managing director of Ambition Group Singapore, said the recruitment pick-up was at first driven by replacement hiring in Q1 through mid-Q2 2010. 'But by Q2 onwards, it was attrition that began to drive hiring and investment in key areas that led to a candidate-short market.'
Seven in 10 executives in Ambition's report have seen people wooed by higher remuneration packages from other firms. On average, Singaporean candidates are offered pay packages 10 to 15 per cent higher than they used to earn and in Hongkong, they can be as much as 20 per cent higher.
About 41 per cent say people leave because of a lack of career opportunities available.
'Attrition is extremely costly to a company. Some research has shown that replacing a person into a role can cost the company 150 per cent of the person's annual salary,' says Mr Endacott.
About 62 per cent of Singaporean executives have to cast their eyes to overseas talent because they are unable to find the right people here.
In banking, Ambition CEO Guy Day finds recruiters tend to pick from other financial hubs like Hongkong, Japan, Australia.
It gets trickier when the roles get more niches, like in digital marketing, where it's rare to find someone with experience in Asia. Typically, says Mr Day, such companies recruit from the US, the UK or Australia.
Companies are resorting to non-monetary means of shoring up talent erosion. About 65 per cent of CEOs in PwC's survey say they are deploying key employees overseas.
Other popular strategies include retaining workers past their retirement age and tapping more female talent.
'If it's purely money, then it’s going to be very challenging for companies to retain people,' notes Mr Endacott. 'However, if it's career development that's the issue, companies can invest more in training, learning and do more to improve work-life balance by offering flexible working arrangements.