SOFTWARE’S BEST EMPLOYERS: It’s All About Money, Honey!

It’s true! What expert opinion, public perception and media pundits have
been saying for a long time–Infosys is the best Indian software company to
work for. But here’s a flash: 55% of its employees say Infosys is not their
dream company. More on this later.

It’s also true that software employees are techno-geeks, looking for
excitement and fulfillment in the digital world. Technology is their big high in
life. But here’s another flash: what really motivates software employees more
than anything else is money and they all think they are underpaid.

This, and a lot more, emerged from the DATAQUEST ‘Employee Perception
Survey’ carried out in the Top 20 software companies. A survey like this–any
study for that matter–is interesting for two diametrically opposite reasons.
First, when it confirms popular and expert opinion and puts a number to what has
mostly been conjecture. And second, when it doesn’t–when it throws up
completely unexpected results, shattering a few myths and dogmas in the process.
This latest DQ survey has done both–while quantifying a few long-held beliefs,
it shatters some others.

Broadly, this is what emerged from the survey–ranking of the best software
companies to work for (from among the software companies that made it the ‘DQ
Top 20 Software Companies’ list last year); a good understanding of what
motivates and therefore, retains, software employees; and finally, how the
industry as a whole and specific companies live up to employee expectations.

The rankings are a big surprise–following Infosys Technologies in joint
second place are Tata Infotech, IBM Global Services and Zensar Technologies, a
major coup for Ganesh Natarajan, who recently took over as managing director.
Rounding off the top five positions is Wipro Technologies.

Tata Consultancy Services has witnessed a big drop, coming in at number 12,
especially given its top ranking in the DQ Top 20 last year in terms of
revenues. The fall is more noticeable because of sister concern Tata Infotech’s
position. Clearly, company branding and revenues have little with which to move
the employee satisfaction index.

Two really interesting contrasts emerged from the study–the gap between
what HR managers think motivates employees, and what actually motivates them;
and the difference between what is required to recruit talent and what is
required to retain it.

Another interesting picture that emerges from the survey is that of the
average professional–he is young, conscious and perked up when he joins the
industry, very aware of company image, touchy about the technology he is
associated with, not moved by the number of zeros in his salary check, and is
overzealous when it comes to the angle of his learning curve, training topping
his priority list. Two years down the line, company image does not matter so
much, but what still does is the technology segment, plus he is also far more
conscious about his compensation package.

When the professional touches five years or more in the profession, money
emerges as the single-most important motivator for him–this does not imply
that the software pro of five years’-plus experience is mercenary. To the
contrary, he is very particular about the technology segment and the company’s
focus areas, but money becomes the key ingredient that balances out the
satisfaction and motivation equation.

An eye-opener–employees in companies ranked 21-25 in our survey are more
satisfied than those in the top five! The following pages deal with many other
such findings of the survey, apart from various elements of employee
satisfaction, motivation and retention in broader detail. But here are some
industry trends:

Satisfaction index: Never high

(Some surprises here: The only motivator for most of
Infosys Technologies’ employees is money. The stated importance of
"technology" is high, though its actual contribution to employee
motivation is virtually zilch. Besides, employees rate the company as
"average" on technology. IBM has got a better rating on technology,
but again, it’s actual contribution to motivation has been zero. In complete
contrast, the only motivator among Wipro employees is the technology they are
working on–they rate the company far above average in this respect. Also,
while Wipro employees say the company is an average paymaster, compensation
contributes little to employee commitment)

• Contrary to perceptions, software employees, on the
  whole, are not very enamoured of overseas opportunities; the promise of a
  trip abroad is not a very effective way of increasing retention. Among those
  that do go abroad, what is preferred is short trips, and not long overseas
  postings–either way, the contribution of this to employee motivation is
  near-negligible. The only exceptions here are Tata Infotech and Cognizant.
  Tata Infotech employees believe short overseas trips are a hygiene factor,
  and furthermore, they rate the company far above average in this respect.
  Cognizant employees don’t say overseas trips are important but its impact
  on employee motivation in the company is very high. Most companies are also
  rated average or below average on overseas opportunities.

Work culture: The biggest lure

• The software industry’s greatest strength is its work
  culture. Across almost all companies, employees rated work environment and
  organizational culture as far above average. By and large, most were also
  happy with their company’s image. A few notable exceptions were Tata
  Infotech, and IBM (employee rating on image–way below average) and I-flex
  (employee rating on image–below average).

• Two other strengths that emerge
  are the "technology" that employees get to work on and
  "training and development". However, there are some surprising
  elements to this–while the industry average on the importance of training
  is high, the quality of training received on-campus is rated as
  "average". The software industry has been committed to minimum
  man-hours of training per year, but as is now apparent, not enough thought
  has been given to the caliber of training. Also, most software employees
  desire greater exposure to training in emerging technologies.

• Contrary to popular perception,
  salaries, perks and ESOPs emerge as the industry’s major weaknesses.
  Employees have rated even HCL Tech, the biggest paymaster (see Salary Survey
  in DATAQUEST’s May 15, 2001 edition) as "average" on
  compensation.

(The reasons are varied. Some of it has to do with
heightened expectations and hype. Some of it is because of the very real
effects of the slowdown that are now beginning to manifest themselves. The
only significant exception here is Mahindra-British Telecom, which has been
rated "above average" on the compensation front by its employees)

• Software employees also seem to
  think that ESOPs are a much over-rated sop and the impact on employee
  motivation is very low. Employees of only two companies–I-flex and Tata
  Infotech–say ESOPs are important to them. Also, the industry as a whole
  rates the overall ESOP values as "below average", with only IBM
  Global’s employees being happy on this count.

• Other industry weaknesses are its
  performance management systems, communication within the company and
  policies and procedures. Despite being a relatively young industry, most
  software employees complain of a bureaucratic style of functioning.

• Interestingly, facilities have
  emerged as a hygiene factor, though employees have largely rated it
  "average". A significant exception here, you guessed it, is
  Infosys.

• The big crib on facilities–lack
  of high-speed Internet access!

Perception: A strange animal

Among the most interesting findings of the survey, on
numerous fronts, is the wide divide between perception and reality. Zensar
(ranked 18th by revenue among software companies last year) has come completely
out of the blue to vie with IBM and Tata Infotech for joint second place.

NIIT, which recently won the ‘Best HR Practices Award’ at
the World HR Congress, figures as number eight on this list. Obviously, it takes
more than that to satisfy and retain employees. NIIT does well in terms of work
culture, technology, company image and interpersonal relationships, but its
performance on all other fronts is rated as "average" or "below
average".

If one were to analyze TCS’ low ranking of number 12 in
this survey, it is because though TCS gets high ratings on factors like company
image and communication, it is not leveraging these strengths enough–they
emerge as hidden opportunities. Also, while TCS’ employees are extremely happy
with its performance management system, its impact on employee commitment is not
commensurate with the efforts the company is putting in. The only strength that
the company is making complete use of is its "work climate" and
"organizational culture". Tata Infotech, on the other hand, is
managing to leverage its capabilities with employees a lot better.

The other significant gap is between what the company
perceives as important to employee motivation and what actually is crucial. For
instance, HR managers rate company image as a "high importance"
factor. This is true for employees with less than two years of experience but
ceases to mean very much after that.

Companies also rate long-term overseas assignments as of
"average importance" and short- term assignments as "least
important". In reality, it is the other way around. So too with employee
stock option plnas–companies believe they are of average importance, while
employees say they are of no importance at all.

On the other hand, while employees place high value on work
environment and organizational culture, companies feel they are only of average
importance. Also, training is important to employees while companies feel the
impact of training on motivation is not very significant.

The only thing employees and employers are in complete sync
on–compensation is crucial to employee satisfaction and the most important
motivator.

Sarita Rani in
Bangalore with inputs from Yograj Varma in
Delhi