India’s largest IT services provider TataConsultancy Services (TCS), recently announcedRs 2,628-crore bonus to its employees, as experts believe that the move will help check its high attrition level. The IT major which employs the largest workforce in the sectorwith 3.19 lakh employees, is reportedly facinghigh attrition, which touched 14.9 percent by March 2015.
Earlier this year, Infosys too announced a 100 percent variable bonus payout to its employees to cope with its high attrition rates. The country’s second biggest IT provider had witnessed a spate of senior-level exits over the past 2 years, and a key tasks before Vishal Sikka when he took over as the CEO last year was to check the high attrition levels.
For IT firms, doling out bonuses is certainly a way to check attrition – whether given in cash or in rewards and other forms of compensation in order to keep their most valuable employees. As noted investor and author, Will Ashworth said in an interview to Forbes, “Anycompany that’s truly interested in customer satisfaction must first meet the needs of its employees; otherwise, it’s putting the cart before the horse. “Employees are the face of any brand. The quickest way to destroy brand equity is to disrespect them. Once you’ve lost trust, it’s only a matter of time before you lose the customer, and likewise, your business!”
It’s more than the money
While compensation and benefits are key to retain and recruit best employees, a survey conducted suggests that simple benefits, such as free food and perks like laundry and transportation services have often attracted people to remain in a company – a practice often followed by Google, Apple, Facebook and other IT majors.
Today, almost every top employer is investing in training and innovation programs. This is to ensure that employees are constantly growing and learning new skills, thereby making a difference to the company and a vital way to hold on to the workforce.
Studies find the best employees look for a sustainable and inclusive environment.
According to Sunil Goel, MD – Global Hunt sticks to the popular adage, “satisfied employees create satisfied customers,” which every company should remember. “If you treat employees as if they make a difference to the company, they will make a difference to the company,” he says.
Just the way, Apple has always recognized passionate, hardworking employees. An Appleexecutive notes, “Apple is a place where the sky is the limit. For those are motivated to learn and be challenged.”
The other criterion is to have a strong support from the C-suite. A Boston Consulting Group report suggests that attrition is lower in organizations where there is open communication – where employers set clear goals and are consistent to their message.
According to Prasenjit Bhattacharya, CEO, Great Place to Work Institute, India and Sri Lanka, rewards and recognition often curb attrition rates. “Not only it is about total rewards encompassing aspects of financial, intellectual, physical, social and psychological rewards, but about recognizing that talented employees are worth far more than an average employee.” Asurvey done by the organization notes one of the key ways to check attrition is to offer rewards for loyalty or long tenure, rewards in gifts or cash for specific actions, behaviours, and contribution. “Employees are happy to receive rewards in gifts or cash for family members’ achievements and also for their personal achievement or contribution within the company,” he states.
A McKinsey Quarterly report too suggests, while financial incentives play an important role in retention—but money alone won’t do the trick. Praise from one’s manager, attention from leaders, frequent promotions, opportunities to lead projects, and chances to join fast-trackmanagement programs are often more effective than cash. The survey found that leadership-development programs are key in retaining the pivotal players it had identified as being at risk of departure.
Finally, even when financial incentives are required, it is important to design them appropriately and use them in a targeted way, suggests the McKinsey report. “Targeting retention measures at the right people using a tailored mix of financial and nonfinancial incentives is crucial for managing organizational transitions that achieve long-term businesssuccess; it’s also likely to save money,” suggests Sabine Cosack a consultant in McKinsey and co-author of the report.
For IT majors such as TCS and Infosys and others, bonus and other employee reward scheme is indeed a smart move not just to reduce attrition and also boost employee morale, believe experts. As PeopleStrong HR Services Co-Founder and CEO Pankaj Bansal told PTI, it also helps employees to be strongly committed to the organization.
TCS’ move also comes at a time when most Indian companies announce their annual salaryhikes at over 10 percent in 2015, according to Aon Hewitt report. Likewise, Bansal sees the the attrition level across sectors, like technology, likely to go up in the range of 15-20, as there will be no dearth of jobs following improving economic conditions. IT firms should therefore explore every innovative way to check attrition and retain their capable employees.