DQ CMR Best Employers 2011: Reaching out to Retain

In FY11, the IT industry grew 19%, up significantly from the 8% growth that it recorded in FY10. Hiring was back in big ways. And so was attrition, acording to DQ-CMR Best Employer Survey 2011. Attrition jumped from 13% last year to 19% this year.

Attrition is probably the most reliable parameter to measure industrys health, even more than recruitment. It is ironic that it is such a bad word!

The higher attrition rate means more jobs and more exertion for firms to create workforce. Yet the sporadic news of layoffs from certain quarters continued to embitter the mood. But as FY11 drew to a close, the apprehensions of the return of the recession had by and large subsided.

Since the attrition rate jumped up, the year was of a strong HR exercise. They faced the challenge to maintain the workable workforce pool in their organizations. It was a time they had to solve employee issues quite persuasively, so that they would not hop jobs.

Irked by Attrition

The attrition rate measured is based on the employees in any organization from April 2010 to March 2011. It was not a vanilla ride for companies, as they continue to lose their talent to their competitors. In the larger picture, we notice that a number of top executives took charge at their competitors. If we take stock of DQ Top200 companies, close to 70 companies have seen significant changes in their senior (C-level) leadership, including CEOs/MDs.

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The companies which encountered the highest levels of attrition in the IT industry included NIIT Technologies (#1), Citrix (#2), L&T Infotech (#3), Dimension Data (#4) and Synechron Technologies (#5), etc. They were faced with the challenge of maintaining a reasonable size of workforce. A strong application development and managed services player, NIIT Technologies was the worst hit by attrition as a number of employees succumbed to its competitors. Similarly other Best Employer companies had a lot of their employees hopping jobs more often than not.

Hence, managing attrition was a task to reckon with. The companies like Tulip, iGate, and Pitney Bowes, etc efficiently handled their workforce challenges thereby experiencing the least attrition. They ably and persuasively showed value to their employees, handled salary as well as work flexibility issues.

As understood, the pressure was mainly on HR departments. In the survey, we came to know that the employee scores have gone up for the companies, whereas HR scores have dipped. Employee scores that influenced the rankings largely, however, speak of the attention paid to them. When overall HR scores are taken into consideration, the companies lose marks. On the HR parameter, Capgemini India scored most, followed by Mahindra Satyam and Synechron Technologies, whereas on the Employee parameters HCL clinched the top spot followed by Rolta and iGate.

And the Winner is...

In last few years or especially after the recession, the employee trust in Indian IT companies have gone high. They have proved their capability in addressing the market challenges and managing the slowdown in a much better way than the MNC counterparts. This is the reason that top 3 places in the DQ-CMR Best Employer Survey 2011 are held by HCL Infosystems, Rolta India and iGate, which are Indian MNCs. They have scored high on preferred employer of choice parameters, matching employee expectations, which otherwise was not a cakewalk. In addition, they have kept their retention rate higher than competitors and addressed issues pertaining to salary, appraisal, and job content.

The Best Employer Survey results also suggest that there have not been any major displacements in the ranking this year, except the re-entry of a few. Tata Consultancy Services (TCS), which topped the chart last year, did not take part, to the benefit of other participants whose ranking as a consequence was up at least by one notch. In addition, there were 4 new entrants in the Top20 club, namely SAP Labs, Mahindra Satyam, Nagarro Software, and NIIT Technologies (overall there are 11 new entrants).

Before we talk about the new entrants, it is important to shed light on the companies which have improved their ratings significantly in the Best Employer Survey. The companies include Tavant Technologies (#5), Virtusa (#9) and ADP (#14). The learning and improvement of innovative HR practices benefited these companies most. Tavant was at 11th place last year and, because of the adoption of improved HR practices, clinched the 5th place this year. Similarly, Virtusa and ADP performed on the overall parameters. Particularly ADP, which was left out last year with just one place (21), has taken a long stride and ensured that its position was not enslaved to someones non-participation in the survey.

Sad Satyamvaad...

While the year was full of HR exercises, a company that deserves mention is Mahindra Satyam, formerly Satyam Computers. The company has re-entered the survey after a gap of nearly 3 years. What is significant is that the company has earned a fairly good score from employees and made it to the 6th place in the Best Employer Survey. The great shift seems to have taken place as the company has won back the trust of its employees, who were left in the lurch 3 years back after a massive fund-swindling surfaced by the founder Ramalinga Raju...Mahindra Satyams rankings on various parameters in the survey is a testimony how the company has emerged from its near shattered image and rebuilt its business.

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The company has added more people and shown employees more value proposition. Talent acquisition remained on top of its agenda last year and it did it as it hired more than 600 employees a month for about 6 months in a row.

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Once Bitten, Twice Shy

Lessons learnt in the recession by employees still influence their thinking when it comes to joining a company. To gauge the fact, last year onwards we introduced Ideal Company to work for parameter, wherein employees are asked to score the attributes of an ideal company. The findings suggest no changes in thinking as the employees attributed highest regard to job security/stability followed by growth opportunities.

Methodology

Research Design
The survey was designed and carried out in 2 phases. In the first phase, HR questionnaires were sent to around 200 IT companies. These spanned systems to software companies, both domestic and exports players. The questionnaire sought information on areas such as employee strength, salary structure, training days, tenure of top management, etc. Of the 200 companies, 49 companies participated in the first phase. Out of these, 38 companies were then shortlisted for the second round ie, the employee survey based on the following parameters:
 Total Employee Size: Hardware, software and marketing IT professionals in India only as on April 1, 2011. This did not include either back-end employees or employees posted outside India
 Average Tenure of Senior Management (GM Level and Above): The tenure figure was factored by the age of the company to remove any discrepancies that may have arisen between old and relatively new companies
 Total Average Training: Included the entire gamut from induction and technical to soft skills and others. The data was weighted on the total hardware, software and marketing IT professionals in the company
 Retention Rate: Share of employees (at least 3 months old in the company) who were still with the company on March 31, 2011
 Average Salary Hike (in Percentage): The first shortlist of companies was based on these above parameters, which were given different weights based on their relative importance. In the second phase, a large-scale survey was conducted by CMR India among 3,337 employees of the 40 shortlisted companies, across the country. However during the second phase, 2 companies didn't participate and so we conducted the survey within 38 companies. The sampling was done on the basis of the distribution of employees in different cities. The employee survey comprised a self-administered questionnaire as the instrument with employees at different levels. This questionnaire included 73 statements under different broad parameters-Composite Satisfaction, Company Culture, Job Content/Growth, Training, Salary & Compensation, Appraisal Systems, People, Gender Inclusivity, and Managing the Slowdown. Employees were asked to rate each of the statements on a 10-point agreement scale. The respondents filled in their opinions on the questionnaire in the presence of CMR's trained interviewers and supervisors.
    Other than the above parameters, employees were also asked about their salary structure, preferred company in the industry, etc. The Employee Satisfaction survey covered 7 major cities-Mumbai, Delhi, Chennai, Kolkata, Hyderabad, Pune, and Bengaluru. In each city, the sample quota was assigned based on the company's employee strength in that city. A further classification of employees was done on the basis of job profile (hardware, software and marketing ), years of IT experience (less than 2 years, 2-5 years, 5-10 years and more than 10 years) and gender ratio. This quota system was followed strictly to get a proper representation of different types of employees in the sample. In order to retain objectivity, every attempt was made to take on an unbiased sample and to ensure that the management of the company did not influence the selection of respondents (employees) or their responses.

BES Ratings

Scores from the HR survey and the Employee Satisfaction survey, calculated separately, were combined to arrive at a composite score. Companies were then given ranks based on the composite scores.
   The HR score of the selected 38 companies was calculated based on various parameters, indexed and weighted on a total score of 100. The parameters used were-Total Employee Size; Average Tenure (years); Total Average Training; Retention Rate; and Average Salary Hike (%).
   The Employee survey score was calculated based on 12 parameters, which was also weighted and indexed on a total score of 100. The eleven 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), Gender Inclusivity, and Managing the Slowdown.
  The scores on the above parameters like Company Image, Company Culture, Job Content/Growth, Training, Salary & Compensation, Appraisal System, People, Gender Inclusivity, and Managing the Slowdown were calculated on the basis of 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-CMR BES score. Dataquest and CMR India decided the weights for all parameters in consultation with HR experts from the industry, and these were used in the survey analysis. The weights were finalized before the survey, to ensure complete unbiased rankings.

The CMR India team was led by Ritesh Mathur and assisted by Poonam

Hardly are there any changes in other parameters, since employees rank flexibility of office hours at #3. It tells that employees are no longer bound by dictates of work pressures and are keen on a work-life balance in order to give their best to their work. But a shift has taken place as employees have given more scores to strong brand image (#4) than positive work environment (#5). It shows their consciousness towards a brand, when it comes to choosing a workplace. It also implies that strong brands have more potential to cope with market challenges. It does not mean that positive work environment has lost significance even though it has been ranked below strong brand image.

Interestingly, 4 participating companiesHCL, Rolta, SAP, and iGatemanaged to find a place in the top ideal companies to work for. In addition, Infosys, TCS and IBM top the Top 10 Ideal Company chart. But the companyGooglewhich was on top last year even failed to appear in the list this year.

Slow and Steady Wins the Race

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The slowdown that hit in 2008 taught some of the harshest lessons to bothcompanies as well as employees. Employees now also think before the leap, paying attention to the managing slowdown capability of a company. And what DQ-CRM Best Employer Survey reveals is that employees also pay heed to a companys capability and preparedness for slowdown. The industry wide managing slowdown score stood at 7.21 on the scale of 10.

The companies which the employees feel are more capable of handling slowdown are HCL Infosystems, Rolta, iGate, ADP, Tavant and SAS, among others. While the companies like NIIT Technologies, Mahindra Satyam, and Sify secured the bottom spots among the Top20 companies, their scores were more than 5.

Broadway

Broadly, the survey took into consideration various other parameters to assess the company rating. It also brought forth some interesting facts about them. The parameters like image, company culture, job content, appraisal, salary, training, dream company, and gender inclusivity, etc did equally influence the ratings of the companies. The appraisal system and salary aspects did also have an impact on the company ratings. Most of the employees were seen content with the salaries paid to them. While Rolta, HCL Infosystems and iGate had their employees satisfied on the salary parameter, UST Global, Pitney Bowes, and Sybase India struggled to appease their employees on this parameter. But despite this, when asked if they were paid at par with the industry standards, interesting facts surfaced. About 80% employees, strongly and partially agreed, they were not paid at par with industry standards. The companies which were rated high on these parameters were Rolta, iGate, and Cybage.

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In addition, gender inclusivity too was on top of their agenda and an integral part of HR policies. What is heartening to know is that the overall gender inclusivity ratio in IT industry stood at 7.89 on the scale of 10, which shows the keenness and seriousness on the part of companies in order to tackle gender-related issues. They manifested seriousness at adopting practices which were friendly for both male and female workers, did not refrain from allowing flexibility to female workers on whom depends many household responsibilities. Amongst the top 20 Best Employers, Rolta was on top in gender inclusivity, followed by iGate and SAP Labs. When asked if their company had different KRAs/performance measures for female employees, more than 96% agreed. Thus, IT companies are handling male and female issues in different ways.

Hits and Misses

The Top20 employers have made to the Best Employer Survey list because many others have missed. Not to be too carried away with this statement, since we also take a look at companies which could not make to the top 20 employer list. While most of them are emerging companies like Fulcrum Worldwide, Global Logic, AGC Networks, and Collabera, etc, they have made a standing in certain parameters, outsmarting even their top 20 counterparts. It is very much probable they might make to the list in the coming year as did ADP.

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While new entrants like Mahindra Satyam and Nagarro have claimed respectable places, companies like Unisys were out from the picture. Even though SAS is among the top 20, it is continuously going down the ranking. In 2009, it was at 5th place, in 2010 at 8 and in 2011 it has slipped down to 15th place. This also points at intense competition among companies to get placed in the top 20 club.

In addition, the companies like Hexaware and FIS have slipped further in their rankings. The decline can be attributed to both HR and employee score as compared to previous years.

Slowdown

In spite of the fact that the job market was a hot, the companies practiced caution in inducting employees. There was race to get the best employees and not the bulk employees. The trends in the Best Employers Survey stand testimony to this. The uncertainty in global markets like the US and European Union never let IT firms in India resort to mad hiring like it used to be in the pre-recession days.

The vicissitudes in the market clearly impact the hiring leaving direct influence on the HR practices of a company. The recent Standard and Poors downgrade of US economy from AAA to AA+ brought back the fears of the recession. All of a sudden, the stocks fell globally. The weakness in the US and European markets re-surfaced, forcing IT companies to defer the hiring since Indian ITs 60% business comes from the US market. Even reports suggests that the companies have postponed the recruitment of people whom they have recently given the offer letters during the campus recruitments.

All said and done, the industry was keen on bringing best people on board, that resulted in the higher attrition rate in the industry. Since there were new contracts falling in the way, the companies both hired and poached talent.