“Entrepreneurs must understand that not all attrition is bad”

“Entrepreneurs must understand that not all attrition is bad”

In this edition, ‘Startup School’ focuses on the topic of people management. We presented Raman Roy (chairman and managing director of Gurgaon-based Quatrro Global Services, a global services company offering business and knowledge processing services) with seven common scenarios that entrepreneurs often find themselves in and requested him to provide insights on how he would handle each of these situations.

Roy is widely regarded as the pioneer of the Indian BPO industry. In the past, he has successfully led the captive BPO initiatives of American Express in India as its business leader and was the chief executive officer of GE Capital International Services (GECIS) and Spectramind. Though Spectramind was acquired by Wipro in July 2002, Roy remained its chairman and managing director until June 2005, turning it into a leading provider of third party BPO services from India. He was awarded the Dataquest Pathbreaker Award in 2002 for directly creating over 35,000 jobs and indirectly enabling the employment of 3.5 lakh people by being one of the pioneers of the BPO industry.

I have only one thumb rule: Treat your employees the way you would expect to be treated as an employee in a given situation.

Scenario 1: Let us assume that a BPO has recruited about 50 people at the entry level and has put them through one month’s training. After three months, the management finds that these freshly trained employees have started resigning from their jobs. What strategies should the company adopt to ensure retention at this level?

The entrepreneur has to identify what is causing these resignations. Once that is done, you will know the causes that can be fixed and those that cannot be fixed.

It sure is a waste of resource to train someone and then see him/her resign. But that is the reality, especially in a BPO industry, where attrition is anywhere between 40 per cent and 60 per cent. The resignations could also be the result of recruitment mistakes, where you just hired the wrong person. It may also be due to other aspects which cannot be linked to the business or training. For example, we had once recruited fresh graduates very well knowing that they were taking some entrance exams. When they got selected post the exams, all of them left, en mass. If the recruitment was for short term assignments this was a great strategy, however it was a bad strategy to recruit these people for the long term when we knew that they were going to sit for exams and if they qualified in the entrance exam, they would leave.

Entrepreneurs must also understand that not all attrition is bad. If people are unable to scale up, then even giving inflationary hikes on a year-on-year basis to them is not necessarily in the interest of the business. For example, during my banking days, we used to have an employee who did totalling of credit card summations. He was paid more than some of his supervisors because he was an unionised employee and every year for the last 20 years, he had been getting a salary hike. Unfortunately, he did not have the competency to do more than what he was doing. This is an employee you would want out of the company as cost will go down and productivity will go up.

Again, there will be employees who will not measure up to the assignment. Both the employee and the organisation will be unhappy. It is best that these employees move to assignments that meets their interest and capability. Such attrition is ‘good’ attrition.

Lesson: Segregate the good and the bad attrition, and come up with strategies that promote good attrition and minimise bad attrition.

Scenario 2: Raghav and Ram have six years of work experience and are both contenders for the shift manager’s role that has come up in the organisation. Their manager hands the baton to Raghav due to his better managerial skills, which leaves Ram a little disappointed. How does a company deal with individual level aspirations?

This can be treated as a motivational opportunity or can be seen as a disappointment on the grounds that the management is being unfair. But it is all about transparency and openness, and bringing forth an aspect that people can improve. The manager who gave the job to Raghav has to make it evident to Ram (and others) that Raghav had better skills and capabilities. The manager also needs to highlight that Ram can also learn if he works hard. It must be seen that the manager can mentor and help in creating these skills and capabilities in Ram like he/she did for Raghav. The focus should be on team work and in making Ram understand that when people reach those capabilities, there will be other opportunities that will come up.

Typically, in an organisation, one must classify employees based on their performance and ranking in a transparent manner and see what their future potential is. If both Raghav and Ram have good potential, then you should ensure that time and effort is spent so that you do not lose the other one. However, if it is categorical that the employee being promoted is rated A and one not promoted is rated C, then it will be good attrition to have. So, the key factor that has to be kept in mind is that promotions are not just based on performance, but also on what potential the employee holds in the future. I have had people who were excellent individual performers but bad leaders or team performers. As people take up senior positions in an organisation, individual-rated jobs at the senior level is minimal. Developing leadership is the key.

Lesson: The manager needs to help in inculcating managerial skills in the employee, who has not been promoted. An effort must be made to communicate that when people reach those capabilities, there will be other opportunities that will come up.

Scenario 3: Raghav and Ram now have conflicts more often than earlier, and Ram often faces conflicts with his senior manager who handed the promotion to Raghav. How does an entrepreneur resolve conflicts among employees, and between an employee and his team leader?

Good people management skills are required to handle this insubordination. But if both Ram and Raghav are high potential employees competing for a position, then you have to improve the work environment and minimise conflicts so that you are able to realise the potential of both employees. If you have incorrectly promoted a person and that is causing conflict, then you are creating trouble for yourself. An environment, particularly in a startup, a certain amount of favouritism and the founder’s culture sets into the organisation. If that creates conflicts, then you are sowing seeds of distrust. You have to be seen as a professional organisation and handle these situations based on demonstrated capability. If it is demonstrated and visible, it is there for everyone to see.

Lesson: Improve the work environment and minimise conflicts so that you are able to realise the potential of both employees.

Scenario 4: At some level, this conflict has reached the CEO of the organisation. But he is unable to make a fair judgment simply because he has not worked with either Raghav or Ram and has to rely on their senior manager’s views. As a CEO, how does one connect with those employees with whom you do not deal with on a daily basis or those who do not report to you?

An entrepreneur cannot work directly with all his employees. At Spectramind, I had 17,000 plus employees, leave alone working with them, I didn’t even know many of their names. But issues do come to the CEO and one needs to make an assessment even if you haven’t worked with them directly. If yours is a large organisation, you have managers and supervisors to deal with it. And as a CEO, it is the matter of asking the right questions and then taking a decision based on facts. If you do this, nine out of ten times your decision will be correct.

Assuming that a CEO has worked with the employee, it would be erroneous on his part to take a decision based on his experience with that employee two or three years ago. The conflict is now, situations have changed, competencies are different and work ethics could have changed. So, one has to go by facts coming from people managing them. Do not supersede what you have created as an organisation’s structure.

Lesson: Ask the right question and take decisions based on facts. Overlay personal knowledge on the facts coming from people managing them.

Scenario 5: There came a stage where the founder and CEO of the organisation was busy dealing with the people problem and couldn’t concentrate on scaling up, as he wanted to and as was the mandate from his investors. At what stage should an entrepreneur remove human resource management from his key result areas?

This totally depends on the time available and what is required. An entrepreneur can be the technology, finance, human resource and operations head. He can have a five-people organisation for the rest of his life or he can get professionals to manage that depending on his/ her core competency. And all this can happen at any stage of the organisation. But the fact is, in the services industry, every supervisor is an HR manager. What is needed is to set out policies and capabilities and to train people so that they can handle their team. Each supervisor has to be seen as a mini-CEO. He/she should have the acumen to manage finance, HR and technology, and that is what creates a scalable organisation.

Lesson: In a services industry, every manager has to be seen as a mini-CEO.

Scenario 6: Sometimes, employees have no complaints about their jobs, but feel they need to do something different and move on. Your thoughts on employee engagement and how to keep them continuously excited?

Take the job of a railway clerk who sells railway tickets. From a junior clerk, he becomes a clerk, a senior clerk and then a head clerk, but he does the same repetitive job for 15 years. Under such a circumstance, it is challenging to keep an employee motivated based on work content. In a government job, the motivation is job security with minimum output. In a corporate environment, where it is a repetitive job yearly, motivation is the salary increase and any attrition there is favourable.

But the answer to this question is not that simple. One first needs to try productivity enhancement and work method training. You will find a way of increasing the involvement of the employee in the job, which will create that engagement that will take away boredom and lethargy.

Lesson: Try productivity enhancement and work method training to beat boredom and lethargy.

Scenario 7: An organisation finds that it is losing its staff to a competitor, who is willing to pay higher salaries. How does a company deal with salary inflation?

Salary is just one component of what an employee looks for in a job. And the drivers to stay in an organisation differ from one employee to another. What is the value-add that the organisation is offering to the employee (for instance, career growth, training, role enhancement, job security etc)? The organisation has to see what it stands for and if the values are being demonstrated by action and being effectively communicated. The company also needs to check that the salary it is paying is in line with the market. When employees resign, conduct exit interviews and find out what the company could have done to retain them. Increasing salary for retention purposes is a wrong game and the only gainer here is the employee. Your business will start bleeding.

You have to understand the driver for your employee. If it is only money, then it is better to revisit your recruitment strategy and see it is in sync with the company’s strategy. You may be recruiting the wrong kind of people.

Lesson: Integrate the strategy of the organisation with the motivational drivers for your employees.