No Threats of Resignation

The HR departments of IT companies have finally stopped complaining. Their

biggest grouse against the brood of whizkids simply does not exist any more.

Frantic recruitment, preparing sumptuous compensation packages and then losing

the same ‘talent’, goodies et al, to someone else who offered more and back

to searching resumes all over again…that was what life was like during the IT

boom. Yes, the slowdown was painful, especially as in several cases, ‘letting

go’ talent was suddenly replaced by ‘easing out’ people you had actually

poached.

But

the deed is done and the dust has settled on the exits. Companies have settled

down to make the most of what is left. Though considerably watered down by the

omnipresence of ‘cost cutting’, companies are abuzz with terms like

re-training, skill development and team building. The HR people back there have

finally stopped chasing impossible recruitment deadlines and have found the time

to practice what they wanted to–building human resources.

A Nasscom study has found that the attrition rate in the IT industry has been

slipping from 22% in 1995 to 4% in 2001. Delving into the reasons for the dip in

attrition, HCL Perot Systems (HPS) HR head Rajat Ganguly says, "The year

2001 has been tough for most IT companies and as a result, recruitment was

frozen. People found it risky to venture out during the economic downturn and

decided to remain with the company or bide their time."

The silver lining



The slowdown might have cut short the software professionals’ dream run

and brought a host of IT companies to their knees. But it also helped companies

to focus more on employee productivity, invest in better training of employees

and also meant stability for employees and employers.

Points out Oracle HR director S M Udupa, "Lowering of the attrition rate

is good for the company as well as its employees. After the overheated growth,

all industry related metrics including attrition, are bound to stabilize at

realistic levels. For the company, greater stability is always welcome."

For once the anxiety about people leaving is lessened, companies can concentrate

more on their business, provide the right strategic focus and ensure better

planning, execution and delivery of products and services.

And the greatest beneficiary of this situation has been none other than the

customer. "The customer today is confident than ever before, as he is now

witnessing clear continuity in the project team. The fear of talking to a new

engineer all over is frustrating for him too!" quips Phillips Software HR

director SV Nathan.

Apart from the obvious business benefits, the confidence that the entire team

will hold together till the end of a project does wonders for the morale of

employees. Team leaders today are charged with a new degree of confidence

because there is a clear enhancement in employee productivity. The power balance

has now been corrected as not every software engineer fresh out of college can

tilt the balance unduly in his or her favor. "The manager does not have to

counter resignation threats and now has the chance to improve his managerial

skills as well because a stable team offers a higher scope for the–Plan, Do,

Check, Act cycle," explains Nathan.

But Onward Novell Software (I) HR head Anil Noronha warns that the drop in

attrition rate might just be temporary and that companies need to prepare for

the future. "Companies need to leverage this opportunity to further

strengthen their employee relationships and engage them more actively to

safeguard against the anticipated increase in attrition rate once the economy is

on growth path", says Noronha. For, as Ganguly points out, real

productivity improvements can only be felt if attrition rates can be controlled

when the business climate is good.

Nevertheless, greener pastures do beckon



And the gloom has begun to lift. Those who stuck around primarily because of

the lack of options are bound to be restless and be on the lookout for better

assignments. According to Nasscom, the attrition rate in the future is expected

to rise between 8-10%.

Besides, most organizations are in the process of consolidation and are at

the same time focusing on exploring new areas. For example, the travel, health

and telecom verticals are likely to see growth. Demand for people with

competencies in these areas is bound to go up. It is the same with insurance.

With the increased focus on Europe, Japan and China, newer, untapped markets are

likely to open up and therefore the demand will also slowly pick up.

Quality counts



There certainly is hope on the horizon, but somehow, things will never be

the same. There will be nothing to match the mad scramble of the IT boom. For

once, it will only be the quality professionals who will be up for grabs.

Companies who were cautious and had shed employees would have to recruit

employees to deliver the new opportunities that would arise. The employers would

be choosy to ensure that the right people are recruited.

"The attrition rates would stabilize around 8-10%. It might actually

rise a little steeper and then plateau. However, we believe that the demand for

good people would always exist. It is therefore imperative that the company pays

personal attention to the high potential and high performers in the company. Get

them involved in the management processes, appreciate their aspirations,

continue to provide them the encouragement to grow professionally and add value

to them while they contribute," says Udupa. Similarly, the drop in

opportunity has taught employees to value what they have and actually make long

term career decisions.

It’s a mindset issue



While opportunities are opening up, there is a level of caution being

exercised. The industry has seen many examples of disappointments, especially

after established people jumped ships when the dotcom fever caught up.

Subsequently, in tougher times, people have seen loyalty and consistent

performance during good and bad times being recognized and rewarded. These

experiences have certainly changed the mind-set of employees, who were jumping

at the first opportunity that came their way, for any increase in emoluments.

And this change in mindset is likely to outlive the bad times.

"Employers at one point in time were increasing salaries twice a year to

retain employees. There were always options, so the slightest discomfiture would

mean the employee walks away to what would seem a better proposition. Today

almost all companies have either cut or frozen salaries. This is all being taken

by the employees in their stride. They realize the need for the company to stay

afloat. They enjoyed the good days and now if they have to tighten their belts

so be it. The down turn has brought in greater maturity," points out Udupa.

Noronha agrees that organizations that invested in best practices during the

boom period (rather than just make a killing) are clearly the winners in the

current business environment. Employees are suddenly realizing the depth of

these company initiatives and are more appreciative now than being cynical.

"The best example would be in the area of change management. Earlier,

employees would go through the motions whereas now they are more involved

whenever an organization tries any new initiatives. With higher levels of

commitment from employees, companies that invested in people during the boom

will emerge even stronger," says Noronha.

The renewed focus on defining long term career path has also resulted in

employees prioritizing their reasons for joining a new company, albeit

differently. Given that a major chunk of the demand will now be from industry

verticals, employees are actually looking at building domain knowledge rather

than moving from one project to another.

Companies too have started looking at people philosophies from the long-term

perspective. Ganguly suggests that we need to establish standard norms for

measuring and quantifying the intellectual capital of a company and start using

that as a measure of performance, along with the business numbers. "Today,

there are very few quantifiable metrics for HR related performance measures,

other than attrition rates," he points out.

In the light of this, Nasscom has implemented a Code of Ethics on recruitment

procedures for its member companies. This is basically to inculcate and

encourage fair and best practices for both the employers and the employees. A

Nasscom spokesperson explains that the issues in implementing such a code of

conduct are varied and different for companies. For example it would be

different for a SME as compared to that for an MNC.

Also in the pipeline is a Nasscom study in collaboration with Hewitt

Associates in which one of the subjects covered is based on the best practices

prevalent in the software and services sector. "This is the first ever

initiative to provide Nasscom member companies to share and participate in the

most critical resource in their armory–its people. The issues involved with

respect to the code of ethics would be outlined, once the study is

completed," informs a Nasscom spokesperson. "However, unless all the

companies practice the same uniformly, the effects would not be felt," he

says. And can Nasscom really ensure that companies abide by the code of ethics?

"Members of Nasscom sign a code of conduct, which needs to be strictly

adhered to. Nasscom can take action if the need be," points out a

spokesperson.

After all, competitive salaries and attractive perks do matter, probably a

great deal at the time when professionals switch jobs. But as Udupa says,

"It is more the other strategies of engagement such as job content,

challenging assignments, a learning environment and involvement in

organizational processes which help an individual to contribute and make a

difference, that keep employees in top gear. There is no short cut to making

this happen. Only companies with such a focus would be able to retain their

employees and be successful in the long term."

Manjiri Kalghatgi in New Delhi