Emerging Employee Retention Strategies in IT Industry

INTRODUCTION: Ever since its inception, the IT industry has been in news for various reasons, largely because of the revenues it has been generating and the employment it has created for millions of people. Because of huge profits and lucrative market size, lot of small and big players have entered into this market, and therefore a major chunk of youngsters are taking their careers into IT sector. Along with the major players in IT sector like Infosys, TCS, Wipro, there is a colossal number of medium and small scale IT industries in India. When there are so many IT Industries, employees have an option of switching over their jobs very frequently. Employees are considering good working condition, challenging projects, perks and a decent salary package and also expecting support for their higher studies from their employees..The moment they feel they are being underutilized, they start searching for a new job, and most often they get the job of their choice. In such a scenario, organizations face a lot of trouble, as a high turnover rate may lead to under productivity. To avoid such situations, organization have to adapt retention strategies to make employees stay for sufficient period in which the employee is able to contribute and perform. An important concern here is which strategy or strategies should be adapted, which works well with all the employees. This is an ambiguous question, as every individual is different and is motivated by different job and personal factors. In this scenario, this research paper follows a line of investigation on the key retention strategies which can work well for all employees of IT Sector.

IT SECTOR IN INDIA: The Information technology industry in India has gained a huge acknowledgement and has become a brand identity as a knowledge economy due to its IT and ITES sector. The IT–ITES industry has two major components: IT Services and business process outsourcing (BPO). The growth in the service sector in India has been led by the IT–ITES sector, contributing substantially to increase in GDP, employment, and exports. The sector has increased its contribution to India's GDP from 1.2% in FY1998 to 7.5% in FY2012. According to NASSCOM, the IT–BPO sector in India aggregated revenues of US$100 billion in FY2012, where export and domestic revenue stood at US$69.1 billion and US$31.7 billion respectively, growing by over 9%. (nasscom).

EMPLOYMENT TRENDS IN IT SECTOR: This sector has also led to massive employment generation. The industry continues to be a net employment generator – approximately added 230,000 jobs in FY2012, thus providing direct employment to about 2.8 million, and indirectly employing 8.9 million people. It is interesting to note that approximately 75%of the IT personnel are younger than age 45. Many managers in the IT Industries are in their 20’s and 30’s therefore making it more difficult to manage and retain them. (Shayo, 2004).

IMPORTANCE OF EMPLOYEE RETENTION: Andrew Carnegie, famous industrialist of 19th  century who is known for having built one of the most powerful and influential corporations  in  US  once  commented, “Take away my factories, my plants; take away    my    railroads,    my    ships,    my transportation, take away my money; strip me of all of these but leave me my key people, and in two or three years, I will have them all again.”

It is well known fact that the IT Industry is totally dependent of its employees, and therefore the employees should be given the first priority of all the factors of production. The fact that retention is more cost effective than hiring is now being brought out strongly in research as well. According to LBW Consulting (Leadership In Business , Worldwide), the cost of replacing an employee ranges from 29% (non-management ) to 46% (management) of the person's annual salary. Expenses are also incurred when someone else does the person's job in the interim, leading to a domino effect on employee cost.(Singh, 2012)

Studies show that the co-relation between retention rate and an organization's performance in customer satisfaction, productivity and profitability is more than 35% in value terms between a low attrition company and above average retention company. Studies show that the co-relation between retention rate and an organization's performance in customer satisfaction, productivity and profitability is more than 35% in value terms between a low attrition company and above average retention company. (Vishal Gupta; Shweta Shrivastava, 2007).

LITERATURE REVIEW
KEY RETENTION STRATEGIES IN IT INDUSTRY: It’s no wonder workplaces everywhere are obsessed with employee engagement – everything seems to link to it. Engaged workers are more productive, perform better, motivate others and, perhaps most importantly – stay. So it is also no surprise that in a labor market such as India where attrition rates of 20-30% are normal and 50% in industries such as IT not unheard of, serious questions about engagement are being asked. (Smith, 2012)

Let’s start with the statistics- A recent Mercer survey highlights that no fewer than 54% of Indian workers are seriously considering leaving their jobs, and that figure spikes to 66% in the 16-24 year age bracket. And they’re not kidding – other independent studies confirm the correlation between intention to leave and actual turnover.

 In another survey conducted (Hausknecht, Rodda, & Howard, 2009) among 25000 employees based on content analysis of employee responses, it was found a general support for the 12-factor model. Relative to other dimensions, and when considered across the entire sample, job satisfaction emerged as the primary retention factor (51% of all respondents indicated this reason) and was followed by extrinsic rewards (41%), and constituent attachments. (34%). In terms of the actual responses that were given regarding job satisfaction, employees mentioned enjoying the actual work involved serving customers, liking what they do as an employee, and having fun while on the job. For extrinsic rewards, employees cited aspects of the company’s compensation such as competitive wages, health benefits, retirement contributions, and incentive plans as primary reasons for staying.

Starting with recruitment, MacLean, (2001), says firstly we have to consider the idea that best people, who we wished working for us, are working somewhere else. Secondaly we need to rethink ‘qualified’ as ‘Quality’. We can train for skill but not for talent or for attitude. Perhaps our Practices must shift to hiring people who have talents, values and qualities that meet our organizational needs. Then, we must train, orient and supervise so that they gain competence and confidence in their Job Tasks. Arthur, (2001) also commented that in open environment employees are hired more for Attitude than Aptitude. Retention begins long before an  employee’s first day at job, it starts when we take a decision to fill a position and start finding someone to fill it. (Dibble, 1999).

What happens in the first few days, will affect the new recruits with the remainder of their career with the organization. (McCooey & McCooey, 2010). Good employees want to develop new knowledge and skills in order to improve their value in the marketplace and enhance their own self-esteem. (Irwin, 2011) Therefore it  is wise to plan the first initial days of his work and train him for the work he is going to perform in the office, rather than leaving him on his own.
Many large organizations cringe at the costs of serious training for an Indian workforce. But it should be remembered  that you are contributing to filling an educational gap in the society, which is partly why labor is relatively cheap. Leading employers see this not as a cost but an opportunity to both harness worker potential as well as a talent attraction and retention lever. (Smith, 2012).

Compesating employees fairly is the next step in retaining them. A serious issue of comensation has arised in IT sector.  If the compensation is inadequate ,the person may accept the job because of his constraints but  will  leave you as soon as he finds a job with better compensation. Company must be aware of the prevailing compensation norms in the industry. Company should keep the compensation system at par . Though majority of the employees do not have job hopping because of monetary gain but certain percentage do follow the same. (Singh D. , 2012) In the old days, companies essentially paid people for their time. Today, more and more companies pay for performance – in every position, not just sales. To retain employees, your compensation plan needs to incorporate this trend. When people exceed expectations, give them a bonus. It helps to lay the plan out ahead of time so that employees understand your expectations and know what they have to do to get the bonus. (Irwin, 2011).

Rewards have also been known for motivating employees for better performance and enhancing job satisfaction. Moreover Employees catch on quickly: Demnstrate goal oriented behaviours, and you receive a reward. Once the link between performance and reward has ben established, employees tend to view the organization more as a business partner and less as a boss.

Next in the line is the careers of employees. Career growth has emerged as one of the top employee retaining factors. No amount of window dressing will hide a lack of career and promotion opportunities in your organization. Apart from salary, this is the most desired benefit employment can bring to aspiring Indians. Visibility is paramount – people need to own their career paths and understand what qualifiers and steps need to be taken to achieve their career goals. Implement dynamic enabling technologies with mobile and social connectivity to career opportunities in your organization. (Smith, 2012).

Another cost-effective way to increase engagement is to give employees every bit of autonomy you can in getting the job done. It might take some organizational redesign, but it could prove very advantageous. Giving employees some freedom in structuring their work may be hard to replicate elsewhere and substantially improve commitment and intention to stay. (Smith, 2012)
Retntion  programs work especially well in environments where employees understand and work towards business, as well as financial objectives, not just operational goals. Employees are encouraged to participate in discussions of Strategic goals with the understanging that everyone has a financial stake in their success. (Arthur, 2001). These are open work environments where exempt/ non-exempt lines are blurred, and titles have little meaning. Innovative work environments are deigned to inspire creative thoughts and activities created. Open work environment also favors peer reviews.(Arthur, 2001). Environmental employee retention strategies address three fundamental aspects of the workplace: the ethics and values foundation upon which the organisation rests; the policies that interpret those values and translate them into day-to-day actions, and the physical environment in which people work. The overall goal is to make your company a place where people want to come to work. (Irwin, 2011).

One of the most productive methods for retaining Top Talent is to ask for employees for their suggestions. Sucessful suggestion programs encourage ideas from employees at every level and provide quick feed back to everyone who submits an idea. In turn, the more idea you are able to implement, the more motivated th workforce will become. And the more Company will benefit. (Arthur, 2001) Magner et al. (1996) argues that employees feel comfortable to stay longer, in positions where they are involved in some level of the decision-making process. That is employees should fully understand about issues that affect their working atmosphere.

Now coming to the personal life of the employees, employees are looking for alternatives because of their collective desire to improve the balance between work and family. If you do not provide them, someone else will. Instead of a traditional vacation policy, the company lets employees take time off from a leave bank, in which they can accumulate as many as 60 days off to use as they see fit. This policy has helped with employee retention, particularly by making it easier for female employees starting families to take time off and ultimately return to work. (Spiro, 2010).

BEST PRACTICES: With the job market opening up, IT giants’ human resource divisions are devising innovative strategies to retain employees. It includes improvised promotion cycles, creating career architecture programmes, monetary gains, travel benefits and intellectual growth.

Infosys is offering room to experiment and career soul searching to keep employees interested. This route is also working well for multinationals, including Google, who find that offering flexibility and freedom of movement across projects have kept employees glued. While for Wipro, offering restricted stock units and restructuring its hierarchical structure have been the retention strategy over the past two quarters. Google, regarded as the world’s most preferred employer, has been trying to give employees opportunities to participate and ideate for projects on a global level and across specialisations. “We try to get employees to spend 20% of their time on projects other than their primary ones.This encourages innovation in product development and foster inter-team communication,” said Jayashri Ramamurti, head-people operations, engineering & product, Google India. (Roy & Ghosh, 2010).

Infosys recently launched “Pathfinder,” which is a career movement programme. As apart of this initiative, 23,000 people have gone through career workshops to understand more about their options.The management says that it is trying to provide employees with internship programs to test waters across different career streams available internally and move around according to their aptitude. (Roy & Ghosh, 2010).

Wipro, has been trying to reward employees through a more tangible process by dolling out 5.7 million shares as restricted stock units to its mid-management employees. This was followed up with a band restructuring programme that saw 20,000 junior level employees being promoted at a 7-8% salary hike in the second quarter of the fiscal. (Roy & Ghosh, 2010).

 Infosys has promoted another 4,000 people taking the total number of promotions this year to 20,000, effective July 1, 2012. This is about over 13% of the company's total strength of 1,51,151 as on June 30. (Tejaswi, 2012).

While recruiting new employees, Infosys took adequate care to identify the right candidates. On the qualities that Infosys looked for in a candidate, Nilekani said, "We focus on recruiting candidates who display a high degree of 'learnability.' By learnability we mean the ability to derive generic knowledge from specific experiences and apply the same in new situations. We also place significant importance on professional competence and academic excellence. Other qualities we look for are analytical ability, teamwork and leadership potential, communication and innovation skills, along with a practical and structured approach to problem solving." (Human Resource Management: Best Practices in Infosys Technologies, 2006).

At TCS, they have established an environment that focuses on individual aptitude, talent, and interests. As a proven practice, they promote cross-domain experience that provides employees with opportunities to function across different industry verticals, service practices, and functional domains as well as varied technology platforms. While all these factors help hone the skills across platforms, they also offer customers a talent pool with expertise that exceeds their industry benchmarks; at the same time, they continuously present the employees with the opportunity to explore the domain where that believe they would fit the best.

Intel corporation, the giant computer cip maker with seven U.S Site offices, requires all employees to attend seven seminars focusing on corporate culture, values and business ventures during their first year of employment.

Net Manage, the Cupertino, the California Software manufacturer, rewards virtually all staff members with a company paid vacation to a resort when sales goals are reached.

Conclusion and Suggestions
The above literature definitely concludes one thing that the reasons, employees leave the organization is very different from the reasons because of which they stay in the organization. It is very much like the Herzberg’s two factor hygiene theory. The hygiene factors are the one without which the employee will leave the organization such as salary. But the motivating factors are one which will actually pursue them to stay in the organization like Recognition and Work Life balance. This means that trying to have a lower attrition rate would not increase the retention rate. For making the employees wanting to stay in the organization, it is necessary to provide them with the following in order of their importance.
1.    Make career paths clearly visible.
The organizations which offer carrer and not jobs are able to retain employees to a greater extent. Belive in the strategy of promoting from within, so that other employees are motivated to stay back for the position they dream of. Moreover, make these paths and carrers easily visible to them.
2.    Recognition can fulfill the self actualization need.
Every person has the need to be appreciated for his/her efforts. Recognizing or appreciating the work of employee boots his morale and he feels that he is contributing something to the organization.
3.    Be more flexible
Flexibility in terms of work timing and work itself can offer the advantage of retaining employees. By allowing some flexibility in an employees schedule you can allow his to perform his off job duties as well.
4.    Make your company a place where people would want to come to work
The work that is being done in the IT sector is mainly on computer, making the work tiring and monotonous, creating a work environment which promotes positivity includes  clarifying  the mission,  communicating positive feelings,  being fair and honest, cultivating a feeling of family, promoting integrity,  insisting on workplace safety, reducing the number of meetings and most importantly- Making  work fun rather than a Load
5.    Beginning  at the Beginning
Hire correctly--find people who not only look good on paper but are comfortable with your company's values and corporate culture. Make sure that there are no surprises on either side by giving full disclosure and ruling out inappropriate expectations even before the person starts work. Companies should screen for cultural fit and attitude, among other things, rather than just for skills that new employees can easily acquire through training.
6.    Creating Equitable pay and Performance Processes
Employers should use a variety of hard (monetary) and soft (non-monetary) employee compensation strategies to make it difficult for other companies to steal their people away. These include Discussing total employee compensation (salary, benefits, bonuses, training, etc.) Designing reward systems to stimulate employee involvement.
7.    Work-Life Strategy
Remember, only a happy employee will prove to be a productive employee, and inspite of offering high salary, if the employee is not able to spend leisure time with his family, he will not be satisfied with the work. So design policies which can offer work life balance to employees, which can include compulsory paid leaves, fixing the time of work, weekends off etc.
Finally we have to know who is responsible for Retention:
The Supervisor, The Second level Supervision, The HR Department or the Senior Management. The answer is all of them. (Dibble, 1999). We often hold the top management responsible for not able to retain employees. But the fact is, each supervisor is equally responsible for retaining all employees under him, because it is the immediate supervisor who interacts with the employee the most. At the same time the HR department must find ways to train and develop employees according to their capabilities, also they must find our reasons of people leaving the organization through Exit Interview, And Finally the Senior management must maintain an open door policy and support recommendations of the supervisor.
Keep in mind that employee compensation constitutes only one piece of the puzzle. If all the other pieces – the environmental, relationship, support and growth strategies – don't fit together into one interlocking whole, you won't be able to pay people enough to work for you.

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