In the recent past, all major IT service providers have embarked on new strategies to drive future growth as well as streamline operational costs.
Infosys has had a major restructuring and new senior management have been inducted, Wipro recently announced its strategic plans to partner with sporting companies and acquisitions are rampant in the industry.
IT Service provides realize the tough global market and increasing competition in the marketplace. As a result, companies are realizing that age old strategies may not work and are not afraid to steer from the usual path to ensure growth.
However, where acquisition led growth or new marketing initiatives are all geared towards the topline growth, attrition is a huge problem for the IT/ITES sector as a whole.
Wipro has had a rough ride in the recent past and the recent announcement by Wipro to check employee attrition sure sounds interesting,
Wipro has decided to rate the performance of senior managers also on attrition rates in their teams. Applicable to employees in D2 and E bands, 20% of the quarterly performance-linked compensation (QPLC) will be linked to attrition in their teams
In my opinion, the concept though first of its kind looks rather promising considering some of the factors why employees resign in the first place.
There is always the monetary part which evidently plays a major role in attrition but according to me there are lot of softer aspects as to why employees end up switching companies.
Career progression, no increase in responsibilities within the project team, lack of challenges in the project are some of the softer aspects which could contribute to an employee becoming disgruntled and decide to leave the company altogether. Now these are individualistic factors and may not apply to everyone.
However, the root cause for these softer issues to remain unsorted is lack of communication.
The manager-team member relationship is seldom transparent and more often than not managers fail to proactively engage with their team members to discuss their satisfaction levels with the project they are involved with. One might say that it is the employee’s responsibility to communicate any issues to the manager but in my knowledge the hierarchy and top-bottom communication approach can often inhibit the employee from doing so.
With Wipro linking attrition to pay packages of senior managers, the onus will evidently fall on these managers to ensure that their team members are satisfied with the work and their role.
This should ensure that the senior managers engage in periodic dialogue with their sub-ordinates on a one-on-one basis to understand their individual aspirations and requirements. If employees feel that their needs are being addressed, I think attrition could definitely be tamed to a certain extent. From that aspect, I think the move by Wipro has the makings of being a smart strategy for keeping attrition in check.
But there is a always a flip side to the coin, isn’t it. Attrition especially in IT industry is a key resultant of the overall job market. A good job market values skill sets and companies are ready to pay a premium to recruit candidates.
A 40-50% hike in good IT job market is not unheard of and a jump like that can be too tempting for an employee to neglect. In cases like these, linking attrition to pay packages may not deliver returns as senior managers will find it nearly impossible to control this external factor. Within the same company, there is often a cap on % salary hike and deviating from that could be beyond the power of senior managers in most cases.
Having said that, it will be really interesting to see if there is a noticeable reduction in the attrition numbers in Wipro after the implementation of attrition parameter in senior manager pay packages.
On a lighter note, could this new pay package trigger a higher attrition at the senior management level ?
What are your thoughts on Wipro’s plan to link attrition to pay packages of senior managers? Is the same followed in any other industry sector?