A-TTRI-tion: The Wrong Churn

It was an important business meeting - we had to review the annual performance report before submitting it to the central leadership team. The HR team proudly presented the statistics, asserting that they were successful in minimizing the attrition to the annualized number of 25%. They claimed that this number is one percentage point below the industry average.

It took me quite a long time to understand what that statistic actually means. It means that we are changing our entire work force every 4 to 5 years. Realizing this, I am left with hundreds of unanswered questions that corporate companies have to handle in their day-to-day operations.

In an industry where people and knowledge are the only key assets, you can only imagine the loss that we are causing to ourselves in the form of brain drainage.

Attrition in the modern corporate world may be accepted as just another business concern, but honestly speaking, this is THE BIGGEST concern for any organization that heavily depends on its people and their knowledge,rather than on any other form of resource.

Theories say, it takes at least a year for an employee to get accustomed to a new environment before he/she becomes fully functional. This time period is indeed a function of the size and the complexity of the organization.

Backfilling the position comes with multiple cost components, namely - impact to the delivery, cost of recruitment, assimilation period before the resource becomes fully functional, and so on. This, in some cases, may cost the business itself - the worst form of damage.

The issue discussed here is not unique to IT and ITES companies now - it has spread to the well-respected PSUs, and to other industries, too. An article on attrition among a batch of newly-recruited graduates in Coal India puts the figure at 28%.

This is a paradigm shift in the typical PSU culture, where an employee joins a PSU and retires with the same organization. Gone are those days.

But if you take a step back and look at the same issue at a much broader level, say, at an industry level or at a society level, and understand who it is favoring and who the victims are, a couple of things become much more vivid and clear.

The primary reason for high attrition is the highly variant gap between quality supply and demand patterns. Especially when the industry itself is growing at such a pace that the staffing team is hardly given any time to plan its staffing needs, and is forced to work vigorously to meet deadlines.

This dynamism, in the shorter run, favors employees, in terms of inorganic growth in their pay-cheques, and also stops employers from exploiting them.

But in the longer run, when the turbulence (caused due to the dynamic environment) gets nullified, and equilibrium is attained, it may hurt the overall growth of the industry. Because this kind of growth may leave the entire work force costlier and unreachable.

In a connected world, a job flows to a place where it can be performed better, cheaper and faster. As time progresses, the world is bound to be more connected, faster and flatter.

This leaves only 2 levers to play with. You become either cheaper, or become better. Given the scenario, you become costlier, you are left with only one lever: become better. Which, I think, is a tough task for Indians, in the global context.

Harish P heads the Location Operations and the Location Management Executive for one of the top IT companies in Hyderabad. He graduated from Osmania University, and pursued his MBA from IIT Kharagpur.