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| Continuing trend of satisfaction levels dropping for three years in a row, despite the Recovery | ||||
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| Satisfaction about salaries and appraisals remains low, but salaries are no big deal-being #5 in 'reasons for joining' (only 8% say it's their most important reason) | ||||
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The DQ Best Employers' club: New entrants-Sasken, MindTree, Infinite, Keane and Ness. CSC and Siemens drop out. Wipro falls sharply. Big gains by Accel ICIM and Oracle |
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The BES*20 |
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The year of Growth. That's what we called 2003-04; in our Top 20 lead issue in July.
The year, the headaches began again. That's what HR is calling the year gone by
This is the first DQ-IDC Best Employers Survey after the Recovery.
Growth means different things to different folks. For much of the domestic market, it meant recovery and happier days-sort of. There was still caution, sharp focus on bottom lines, tight control of cash. But the market did grow at 24%-beating services exports growth, for the first time.
But for the larger services exports businesses, revenue growth has a linear basis and foundation: employee numbers. At an average of 16 lakh per employee, or thereabouts. To get growth, add employees.
Thus, a matching 24% growth on the services side, and anticipation of higher growth still in 2004-05, meant rapid hiring-both in IT and in BPO. And both in the services giants like TCS, Wipro and Infosys, and in the MNC businesses and captive centers, whether in IBM or HP or
Accenture.
And as MNC captives' sizes began to approach the services giants', they began to face similar issues: attrition, salary dissatisfaction, and rising employee disengagement.
We Don't Get No Satisfaction
As is the norm, there were major gains and losses, new entrants and dropouts, and some surprises.
The first and biggest of the surprises is apparently a small gain, by just one rank. That's TCS, which had jumped from 10 to 2 in the Best Employer Survey (BES) ranking last year. It inched up further this year to top the DQ-IDC BES 2004.
The surprise is that it's a giant, which has grown further last year to 27,000 employees-meaning severe HR challenges-and anyway has not had a great track record as a paymaster. But it changes a lot of things in the run up to its IPO, and the prospect of ESOPs would also have helped stimulate employee engagement.
Infosys, which had dropped from rank 1 to 4 last year, moved back up to #2. Accel ICIM and Oracle India were the big gainers and climbed significantly in the BES ranks. On the flip side, Wipro continued its decline from 3 to 7 to 18 over the past three years. Datacraft also saw a significant drop and is placed at #20 against last year's #13.
Beyond the figures is a clear overall trend that parallels all the rapid growth and hiring: declining overall satisfaction, for the third straight year. For instance, in the "preferred employers" listing (see page 16), where we rank companies by the number of their employees who named their own company as their "dream company", many majors companies see a decline. For instance, 52% of TCS employees had voted for TCS as their dream company in BES 2003 survey; now it's declined to 40%. For HP, the drop is from 54% to 37%. (Some have gained, too, such as Infosys and Sun). And the dozen-odd that have been through the last three BES surveys, barring Philips and Rolta, have all seen a fall as "preferred employer". For instance, at Sun it has fallen from 97% to 56% over two years; at Cadence, it's down from 82% to 50%.
Can't Buy Me Growth
"Salary & Compensation" is no longer the biggest deal today. It's dropped to #5 in its importance for employee satisfaction. Of course, this certainly does not mean that salary is no longer important for employees, given that this parameter shows the least satisfaction among all employee satisfaction parameters. Employees are looking much beyond salaries in evaluating companies-for the last couple of years.
After the recession, employees were more worried about job security and stability (#2 reason for joining, last year) than with salaries. The recession is over and the salary hikes are back: now employees worry more about growth opportunity and career prospects than job security-or salaries. (Anyway, 66% of the respondents said they had a salary hike in the last six months, and over two-fifths had 11-20% increments in their last hike.
| Methodology DQ-IDC Best Employers' Survey 2004 |
| Research Design The survey was designed and carried out in two phases. In the first phase, HR questionnaires were sent to around 200 IT companies. This was a mix of hardware and software companies in the country and included both Indian companies and
The first shortlist of companies was based on these six parameters, which were given different weights based on their relative importance. In the second phase, a largescale survey was conducted by IDC among 1,010 employees of the 28 shortlisted companies, across the country. The sampling was done on the basis of the distribution of employees in different cities. The employee survey comprised of face-to-face interviews with employees at different levels, based on a structured questionnaire. This questionnaire comprised of a number of statements under different broad parameters-Composite Satisfaction, Company Culture, Job Content/Growth, Training, Salary & Compensation, Appraisal Systems and People. Employees were asked to rate each of the statements on a 10-point agreement scale-which was then regrouped into 'Strongly Agree', 'Somewhat Agree' and 'Strongly Disagree' responses. Other than the above parameters, employees were also asked about their salary structure, preferred company in the industry, etc. The Employee Satisfaction survey covered six major Like previous year, a decision was taken this year also to include companies like The BES Score The HR score of the selected 28 companies was calculated based on the six parameters, indexed and weighted on a total score of 100. The six parameters used were-Total Employee Size; Revenue CAGR (2000-01 to 2003-04); Average Tenure (years); Total Average Training; Retention Rate; and Average Salary Hike (%). The Employee Satisfaction score was calculated based on 10 parameters, which was also weighted and indexed on a total score of 100. The ten parameters used in this case-Overall Satisfaction score; Composite Satisfaction (Company Image); Company Culture; Job Content/Growth; Training; Salary and Compensation; Appraisal System; People; Preferred Company (Internal: Percentage of respondents of a company who said their own company was the preferred one); & Dream Company (Industry: Percentage of respondents in the total sample who preferred a particular company). The score on the above parameters like Company Image, Company Culture, Job Content/Growth, Training, Salary & Compensation, Appraisal System and People were calculated on the basis of the number of statements under each of these parameters. A correlation analysis was run between overall satisfaction and statements across all these broad parameters. It gave us the dependency of the dependent variable (Overall Satisfaction) on each of these statements, which, in turn, provided the weights of each of the statements. The weighted average of the individual scores of statements gave us the scores at each of these broad parameters level, and these were used for the final ranking. The HR and Employee Satisfaction score was weighted and indexed on a 100-point score to arrive at DQ-IDC BES score, 2004. |
Add to this, the increased demand side pressures in the industry as MNCs and all else stepped up their recruitment drives. With too many jobs chasing too few employees, it was normal that employees start looking at growth opportunities and company image as key satisfaction drivers. For the HR managers, "job content" and "technology" were key motivators and recruitment/retention factors. And this is where the MNCs step in.
The MNC Charge
The past two years witnessed a deluge of MNCs of all sizes and shapes firmly entrenching in India. While IBM, HP, et al, saw large scale hiring, others like Accenture, Google etc set up shops. Their proposition: work on technologies that can change the world; work for global companies (besides the higher salaries).
No wonder, money is taking a backseat in the decision for joining a company. Who are the dream companies for the masses? Eight of the top ten here (see "Dream Companies") were MNCs. Even Infosys, though it retains the "dream company" crown for the third year running, saw a fall of 29% from last year.
But, while Indian companies will find that getting and retaining top talent an increasing pain point, it won't be different for MNCs either. The HR migraine for them has also started. Unlike BES '03, where MNCs dominated employee responses across all parameters, there is much change now.
Of the eight broad employee satisfaction parameters, MNCs top only four this year, compared to eight of 10 last year. Or take IBM; while the company gained in the HR rankings, it has moved down by six points in the employee satisfaction survey. And it was ranked below #14 for each of the employee parameters! It was 17th in overall satisfaction and company image and 15th in 'people and appraisal' parameters. The pain certainly seems to have started for the MNCs as well.
Finally, a closing thought. 2004-05 will be the year of the IT professional. No longer is he willing to be benched, or take salary cuts. The IT pro will call the shots. Where the company does not re-look, innovate, reposition, market itself to be top of mind, the pro will move on.
Given the demand side pressure, with MNCs and Indian companies vying for the same talent pool, and with salaries no longer the big key, HR managers will have their hands full in recruiting and retaining talent. May the company with the best culture, job content/growth, HR processes and image win the best talent.
For HR, life just got that much more difficult.
Team DQ Survey by IDC India (survey manager: Parijat Chakraborty). Project consultant: Sarita Rani.