One in four employees in the organised sector in India is set to switch jobs, the highest attrition rate globally, according to a Hay Group study. The series of fresh investments planned across sectors could raise demand for talent even as economic conditions remain tepid, raising concerns on employee engagement and retention.
“We are in the eye of an employee turnover storm. Organisations in India must give serious thought to what drives employee commitment,” says Mohinish Sinha, leadership and talent practice leader, Hay Group India. Firms need to focus on employees with mission-critical skills, as well as high-potentials and those holding crucial roles, he adds.
Employee turnover is predicted to rise to 26.9% in 2013 with an employee base of Rs 3 crore compared with 26% in 2010 on an employee base of Rs 2.8 crore, according to the study, ‘Preparing for Take-Off’, conducted in association with the Centre for Economics and Business Research. It covered 700 million employees in 19 countries.
Worldwide, attrition is predicted at 21.2% in 2013 on an employee base of Rs 71.6 crore compared with 20.3% in 2010 on an employee base of Rs 64.4 crore. The number of workers expected to take flight will reach Rs 161.7 million in 2014 – a 12.9% increase compared with 2012 – as growth builds and employment opportunities increase, according to the study. Comparatively, turnover was minimal between 2010 and 2012. In the next five years, 49 million employees will leave their employers globally.
Attrition in India to top world charts in 2013; one in four employees to change jobs
“The figure is indicative, and helps to understand the employee mindset. It could help companies figure out why their employees are thinking in such a direction,” says Sinha.
In India, sectors like infrastructure and banking – where new players are entering the field – will continue to suck in talent. In infrastructure, nearly $1 trillion of investment has been planned in the years to 2018. With half of this expected from private financing, there will be huge demand for labour in India’s finance, insurance, real estate and construction sectors – totalling 14% of employment in the organised sector – and raising turnover in these activities, as Sinha points out. Besides, there is a huge demand for ready talent, he says.
But not everyone thinks it is a function of external growth conditions. “The best insurance against attrition is not to hope for lack of opportunities outside but to build strong internal conditions which act like a glue to employees,” says Divakar Kaza, president, HR, Lupin Pharma.
The study seems to support this. Nearly 55% of Indian employees expressed concerns about the fairness of their compensation and the extent to which benefits meet their needs (48%). One in every three employees expressed concern over a lack confidence in being able to achieve their career objectives with their current employers (37%); as a result, they are concerned about opportunities for learning and development (39%) and supervisory coaching for their development (36%).
An analysis of Hay Group’s employee opinion database, covering 5.5 m employees worldwide, threw up the most consistent predictors of employee engagement and commitment: confidence in leadership; an opportunity for career development; autonomy; supportive work environment; and appropriate compensation.
A significant number of Indian employees have expressed concern over their firms’ ability to provide the five retention factors – especially when it comes to the opportunity for career development, says Hay Group’s Sinha. “Organisations need to give serious thought to how they stack up against these factors now – before the job markets begin to improve. Those who don’t are likely to find employees exiting in increasing numbers as more opportunities become available,” he says.
However, not everyone is buying the study’s findings. “I am surprised to know we will see this kind of employee turnover in India because the GDP has declined to 5% and employees have till now stuck to their companies due to job security issues and the lack of new opportunities. The turnover might be voluntary,” says Adil Malia, group president, HR, Essar Group. (Source:ET)