Peter Drucker observed in one of his books: “the two generally accepted concepts of managing the worker – Personnel Administration and Human Relations – see the task to be done as something one tacks on to a business. Personnel Administration concerns itself with activities and procedures: Hiring people, paying them, training them. Human Relations, as the term is commonly used, concerns itself with employee satisfaction, with communication and with attitudes. Yet both approaches seem to agree that to manage worker and work does not seem to require any change in the way the business is being conducted. And the tools and concepts needed seem to apply equally to any business.” As against this HRM scenario, the approach to life has drastically changed in the recent past: people are no longer working for money alone. The result is: employees moving out in search of newer pastures.
In the industrialized countries, it is being noticed that people are no longer working for the basic needs of living alone. Money is no more felt as the lone driving force behind peoples’ work. Yet, people are continuing to work hard. A question thus arises: what drives them to work that hard? Is it their love for work? Or, is it their passion for the job? This takes us to a story of Old Testment – the story of Nehemiah, a Jewish captive who rebuilt the walls of Jerusalem that were destroyed by fire. The story goes on to say that when Nehemiah set out to reconstruct Jerusalem, the crowds mocked him and his work force and even threw rocks. It is to protect his workers Nehemiah said to have divided his work force into two groups: one to work on the reconstruction and the other to guard them from the mocking public. Thus he had re-erected the walls just in straight 52 days and nights. All this, he says, he could achieve it because “the people had a mind to work”- they were intensely passionate to accomplish an ostensibly impossible task. Does the story offer any clue to our current problem of employee-retention? “Yes”, in unequivocal terms. It says that organizations have to create such atmospherics which simply engender “a mind to work” among the employees.
True, so much has changed since the days of Nehemiah. The internet has brought incredible changes in the very outlook of business and the speed at which it is being carried out. It indeed created a new band of workers- ‘knowledge workers’. These are the employees who are putting their knowledge to work rather than their muscle power. Today, knowledge is recognized as a high grade input of the business. As against the traditional workers of manufacturing segment whose functioning is merely considered to be additive, knowledge workers are to be sourced measuring the strength that they could bring in to a given job in alignment with its requirement. Hence they are being paid incredible sums vis-à-vis traditional workers. It is of course a different matter that knowledge workers are reported to be a disgruntled lot and maybe that is one reason for their hopping from one job to another.
Nevertheless, the basic rules of work have not changed: Many people still work because they love ‘work’ and the objectives it attempts to achieve. Research too shows a strong correlation between commitment to work and excellence in output. So, the moot question now is how to reconcile these conflicting demands and retain the employees committed to organizations. It obviously calls for a new template of management that can effectively identify the underlying reasons for good employees leaving the organizations, and initiate corrective measures right from recruitment to their induction, placement, competency-development, job-satisfaction, etc. that can tackle the problem of keeping employees’ interest in work alive and discourage them from slipping into dissatisfaction and their ultimate migration.
Why good employees leave organizations?
As every organization looks for the best, brightest, dynamic and most productive workers to man their organizational rolls, employees too look for organizations which offer them a chance to use their skills to fullest extent, an employer who can tell them what they can do better, an organization that offers them excellent scope to grow intellectually, a job that challenges their wisdom, a leadership that can be relied upon, etc. A survey carried out by Watson Wyatt worldwide identified the following factors which make employees remain loyal to organizations:
Table-1: What makes employees remain loyal to employers?
Chance to use skills on the job | 11% |
Trust in senior leadership | 14% |
Competitiveness of rewards | 14% |
Job security | 11% |
Quality of company’s products and services | 10% |
Absence of work related stress | 7% |
Honesty and integrity of company’s business conduct | 7% |
All other factors | 26% |
Ultimately, it is the ‘employee satisfaction’ that is found to impact the employee migration. A study carried out to gauze the ‘employee satisfaction’ levels in the Connecticut-based market-research firm- Stamford, which lost hundreds of millions of dollars between 1993 and 1995 and was in a bad shape at the time of its 1996 spin-off from Dun & Bradstreet, revealed that 58% employees were dissatisfied with their jobs and the way the company was being run. To redress this dissatisfaction, the company gave its employees a vote on part of the management team’s bonus. Once the company understood what the employees wanted and implemented the same, it is reported that employee’s satisfaction levels have gone up and employee turnover dropped to 10.5 percent- a clean decline by 50% (CFO publishing corporation, 2000).
It is often noticed, particularly in the field of technology, that the attitude of an employee and the way it is being respected by the employer plays a great role in building up commitment to work and loyalty for a company. For instance, incubators often feel that the best way to learn it is to do it oneself, something which Silicon Valley is said to encourage its entrepreneurs to do. Silicon Valley organizations are known to consider failure a positive step for it helps one to ensure that the same mistake would not recur. It is this positive attitude of the entrepreneurs towards failure and using it as a learning experience that is reported to have made huge talent pool available to the industry. As against this, “the penalty for failure in India is very high” says, Rajiv Sahney, Managing Director (India) of Antfactory (‘The Human Factor’, Business Standard, May 14, 2000).
The next in importance for competent people leaving companies is not employees but the employers. In a market driven economy, every employer is anxious to retain his lead in the race and in the process companies are resorting to an age-old practice: poaching. Companies must accept the reality: Somewhere out there is a poacher who knows the employees of other organizations as much as their managements know them. Indeed strategic poaching has become the order of the day. It is not confined to just volatile high tech companies. It has become common even in manufacturing sector: For instance, if an oil company wants to expand sales at its service stations, it is not hesitating to hire people from Pepsi. Thus, poaching has now become an accepted fact of business.
Today the competition for talent being so intense, mere tinkering with routine HR functions such as – compensation packages, career paths, training efforts, etc., cannot insulate a company from its competent employees leaving them. Hence, Peter Cappelli, in his HBR, 2000 article-A Market-Driven Approach to Retaining Talent - observed that it is not the company, but the market that ultimately determines the movement of people from organization to organization and suggested that companies adopt market-driven retention strategies. Let us now take a deeper look at some such strategies.
(to be continued in the next post...)
GRK Murty
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