Monday, October 22, 2007

HR says there is a "Retention" problem...

I don't know if i should write about this. Considering the fact how blogs are monitored, and the risk of rubbing the right people the wrong way.

But anyways, here it goes...

I have been thinking about the so called retention problem which HR people commonly face. The issue, according to them, has grown to gigantic proportions. The common thing which you can hear from HR (My feedback comes specially from iflex. Thank you U-KNO-WHO) , and elsewhere, is that the generation is an instant noodle generation. They want everything in two minutes. Not ready to wait, not ready to settle down. Its too difficult to retain them, and idiotic even to try.

I have a question for them. What do *you* do to retain them? Do you try to understand and solve the remuneration issue? Why is there so much a difference between a new joinee having the same experience as an old hand? Yes yes, i know, in order to recruit him, we have to pay him more than what he is getting. But do you ensure that the old employees also come up to that level in the next cycle? From what i have heard, its a BIG NO from most of my friends.

This brings us to this example, from the employee's POV.

There is a company called corn-flex, with Dilbert working with them for 2 years now. His project is expanding, and a new member joins his team. The new member -say Asok- has a very similar background as Dilbert.
Now Dilbert finds out that Asok is drawing much more than he is. Dilbert expects the normalization to happen during the appraisal cycle, but it does not.
So, now the only option for him to come up, is to quit and move to some other company.
Would he have done that, if he was at the same level?

Disclaimer: This is NOT my story. :P


zac said...

The issue lies not with HR, but with corporate managements who have, as their primary agenda (and correctly so) reduction in the overall payroll payout. Typically the new employee to currently employee ratio in any given year, will be anything between 5 to 20% depending on the growth and the current size of its workforce.

Let's say that we provide a 20% increase over current salaries to the incumbent 10% employees. That is a total increase in payout of 2% over the previous year. Now, to provide some measure of equity to the current employees, their salaries are also increased by 20%, so that nobody is unhappy, the total increase in payout is 90% x 20% = 18%. Considering that 60-80% of an IT organization's costs are payroll, we are talking of a nearly 60-80% x 20% = 12-16% increase in total costs over the previous year.

Try convincing the top management to release 15-20% more budget this year, of which only 2% is new employee acquisition expenses.

I think if we think from the HR point of view, they have no option but to let people go, than to increase everybody's salaries by 20%.

Hrishi said...

Hmm. Never thought it from the other POV. Ur explanation makes it sound logical.

Sad, but true. :(