High Attrition in a Considerate Corporate Culture

High rate of employee turnover and attrition is a major problem in the contemporary corporate environment in India, especially in the information technology (IT) sector. One of the suggested solutions is to build a more sensitive and considerate culture. But is that enough to stop the constant exodus of young people? This case study examines the problem in the light of integral management.

Case Study

Ramesh Chandra is simultaneously worried and bewildered by the unfolding events in his company in the past few months.

Being the CEO of Ram Informatics, a mid-sized and growing IT-services company based at Pune (a second-tier town in India), Ramesh has been able to triple revenues and quadruple projects since he took over the company from his father. He attributes his success to the unique culture he has created with an emphasis on genuine caring for employee’s personal as well professional needs, and a participative management where all employees are given the opportunity to share and discuss their ideas with top managers. For example, the company has a department called ‘Human Support’, made up of executives whose sole job is to listen to employee’s grievances, problems and needs and find solutions by discussing the issues with the top bosses. The perplexing fact was that despite such a genuinely caring culture, the company is losing a large number of young talented people to competitors.

During a regular evaluation meeting with Romila Chatterjee (Head of HR) and Ramu Adhikari (Head of Operations), Ramesh wearily queries: “What is the latest excuse a deserter has put in your exit interview?” Romila replies looking into the pertinent exit form, “This guy Gambhir, when I warned him that he won’t get this kind of attentive and responsive culture at the XYZ competition told me bluntly, ‘Caring is OK, but what I want is a little more money than caring.’” Ramesh retorted with an edge in his voice “All that these kids care for is that extra couple of thousands. People like Gambhir are immature and short-sighted about their lives and careers. They refuse to understand the kind of growth and experience they can gather being a part of an organization like ours.”

After a pause, looking at his colleagues Ramesh declared: “Let us come to the crux of the problem; how do you both suggest that we stem this problem?” Ramu turned to Romila, “Do you see a pattern behind this exodus in your exit interviews? Do you think most of them are like Gambhir running after money?” “Not all!” enunciated Romila. “Some of them, a little older and matured, decided to move away for better career prospects, enriching experiences of working on bigger or more diversified projects and some even for offshore learning opportunities.” Ramesh sighed, “Again I’d say, these guys are also not very forward thinking. Ours is an expanding organization. If they perform well and stay steadfast with us for some time, we as an organization and all of us individuals have the scope to grow bigger and better than the top IT names today which have already reached their peak capacities and now have even started declining.”

After a contemplative silence after this speech, Ramesh probed, “Now can you guys suggest some solutions?” “I am not sure whether it is really a great problem,” said Ramu firmly. “I agree that our present attrition rate is a little above the industry average. But I suggest we should not get unnecessarily bothered if greedy and immature personnel like Gambhir leave the organization. We should concentrate on how to retain experienced and talented employees who can contribute substantially to the growth of our company.”

Ramesh nodded his agreement, “Yes, that’s what I also propose. We have a culture which is genuinely employee-friendly and empathetic, and as far as I know our ‘Human Support’ department is not only unique but also proactive in addressing the concerns of our workforce. This is what makes us different from other companies in the industry who only care about the bottom line. As we expand, our Human Support system can be a major factor in attracting and retaining people. Meanwhile can we do something to bring down the attrition rate?”

“Yes, I think we can,” exclaimed Romila “As you have pointed out, most of people job hopping don’t think of the long term. In our induction programmes, we have to make a greater effort to emphasize on the importance of such long-term thinking to these young people and the relevance of our caring culture to their personal well-being. Secondly, we have to think more seriously about providing a long-term career growth and more learning opportunities to people in a systematic and planned manner.”

The Commentary

A caring, compassionate corporate culture is undoubtedly a great asset to a company and very positive plus point in retaining talent. As Ramu rightly points out, in a small IT company a fair percentage of attrition will always exist when it has to compete for talented and innovative personnel with big, successful companies (e.g. Infosys, Tata and Wipro in India). The main problem is how to prevent capable, high-potential employees (who can contribute creatively and meaningfully to the growth of the organization) from slipping away.

Ideally, as a part of long-term planning every company has to make a conscious, sustained and progressive effort to fulfil an entire spectrum of needs of people within the organization. There are many theories on these human needs and the most well known and also most intuitive is the Maslow’s need hierarchy concept. In general, we may classify these needs into seven categories:

  • physical needs for survival and security;
  • stimulatory needs for wealth and enjoyment;
  • emotional and social needs for harmonious relationships and societal existence;
  • vital needs for power, status, and achievement;
  • mental needs for knowledge; understanding, learning and progress;
  • ethical needs for higher values or a cause or contribution to the society; and finally
  • spiritual needs for self-realization and return to the spiritual source of our being.

In each individual, a specific cluster of needs may dominate the nature and the rest may remain dormant or secondary. The true meaning of ‘caring’ is to understand the exact and precise needs of each individual and try to full fill it as much as possible.

In most young people, such as Gambhir, the need for enjoyment in life can be very strong. Even when the higher-order needs are met, this need for enjoyment can still be there and influence their decisions. For example, Arvind Eye Hospital in Pondicherry provides a high honourable purpose and excellent opportunities for professional development, yet R. D. Tulasiraj, Executive Director of Arvind, states that “retaining doctors is a constant struggle.” Dr. G. Venkataswamy, the founder of Arvind, also points out, “Once they get experience and make a reputation, quite a few doctors decide to move on to places where they get more money.” So people like Gambhir should not be lightly dismissed as greedy and immature. Many talented and high-potential young people may have this strong desire for more money not for its own sake, but because it helps them enjoy life to the utmost with all the comforts provided by technology and at the same time save money for building a future, which is a legitimate need of the young people. Companies such as Ram Informatics have to process and arrive at a right, balanced strategy for fulfilling these legitimate needs of its young and talented employees. Paying market rates is one way of fulfilling this need. The other way is a performance-linked salary structure. The third way is to provide easy loans for buying appliances of enjoyment such as cell phones, laptops, TVs, cars, foreign trips or even soft loans to build homes.

At a higher level, the older group who are awakened to higher needs cannot be motivated by money alone. These categories of people (especially those contributing substantially to the growth of the organization) need a much greater and careful attention from management. There must be a regular dialogue and discussion with them at the individual level to understand their needs, problems and aspirations, personal as well as professional. Here is an illustrative example:

Mark was a very experienced loans officer and a star performer at a multinational bank. The management of the bank was very satisfied with Mark’s work, and pampered him with a multitude of monetary and non-monetary benefits. However, Mark was not feeling very content and was planning to leave the bank. When the bank management came to know about Mark’s intentions, the management of the bank, along with Mark’s boss, had an in-depth dialogue and discussion with Mark to understand the true cause of his dissatisfaction. It was found that Mark was not happy because he felt that his job was not intellectually challenging any more. He had started feeling stifled because of his job profile, which had remained the same for many years. Assessing his aspirations and needs, the management shifted Mark to the research and training division of the bank and was able to not only retain a gifted, experienced employee but also added to their larger talent pool.

Another important factor which needs careful consideration by Ram Informatics is the conciliation of its workforce with the nature, culture and values of the organization. The company management has to be clear on the type and nature of organization it wants to build in the present and future, which means maintain a constant balance between its long-term vision and goals and the type of people required to build that future. If this factor can be interlinked into the recruitment, training and HR policies of the organization, it can be a safe and sure long-term remedy for rising attrition rates and the problem of retaining talent.

M. S. Srinivasan

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