HYDERABAD:
Wisdomjobs.com, one of India’s leading end to end online recruitment and career solutions portals, today released the outcome of its survey on “how companies are fighting attrition with monetary and non-monetary benefits.” The Survey was conducted across 150 companies from 10 different industries that are Retail, Healthcare, IT, Manufacturing, Infrastructure, Automotive, FMCG, Logistics, ITES and BFSI; mainly to understand how companies are coping with the challenge of retaining their valued employees. The survey also takes a look at the average pay hikes offered by these companies with a view of increasing employee retention.
Monetary incentives still rule the roost when it comes to employee retention, finds the study. Often, the most well-laid business plans of companies are thrown astray by attrition. The reasons for attrition are many – stagnation, lack of learning opportunities or bad management. From start-ups to MNCs, organizations battle attrition at various levels, and have been forced to put several basic and innovative strategies in place to come to grips with it. While some companies resort to out-paying their competition, others offer employees flexible career paths, skill development opportunities, more responsibilities, and a greater say in decision making.
Upon releasing the results of this survey, Ajay Kolla, Founder & CEO, Wisdomjobs.com said, “Organizations have to take cognizance of the fact that factors that attract employees to the company are not necessarily the ones that will keep them there in the long run, and build their retention strategies accordingly. Whatever be the retention strategy followed by companies, eventually they need to build a workforce of satisfied employees who can continue contributing to achievement of the long-term goals of the company. While companies will have an upper hand in a recession, at other times, more often than not, they are left fighting the retention battle.”
So what actually makes employees leave?
While there are several reasons why employees leave their organizations, a majority of these reasons can be classified under three heads – for better monetary benefits, for better career prospects, and for personal reasons.
41% of respondents said most employees leave looking for better pay and benefits.
32% felt the biggest reason for employees leaving is better career prospects i.e. better work environment, career progression, more challenging work, etc.
27% said the major reason for attrition is due to employees’ personal commitments such as marriage, relocation, health issues, childbirth and care etc.
Attrition across experience bands
While, as expected, attrition at entry and junior levels is relatively high, companies also see significant attrition at middle and senior management levels (as a percentage of number of employees at that level).
Among the companies surveyed, the average annual attrition at various experience levels was as follows:
How do the locations fare w.r.t. attrition?
While attrition rates vary widely between industries and sectors, it has been observed that they also show variation based on location. Several factors such as the concentration of certain industries, the volume of jobs available, the quality of life, etc. play a role in determining this.
Attrition rates were found to be the highest in Delhi at 11.6%, followed by Chennai at 10.8% and
Hyderabad at 10.2%
Mumbai had the lowest attrition rate at 6.8%, followed by Ahmedabad at 7.5% and Bangalore at 8.5%.
Kolkata and Pune have almost similar rates of attrition at 9.3% and 9.5% respectively.
Middle management – 11%
Senior management – 8%
Freshers/Entry-level – 19%
Junior management – 13%
Location-wise Attrition Rates
What Can Help Retain Employees: According to Recruiters almost 50% of recruiters also felt that career growth opportunities are essential to retain employees.
38% of recruiters said training and mentoring of employees is important in retaining them.
45% said a positive work culture and a happy work environment plays a key role in long-term retention.
30% felt that regular communication and engagement of employees can help in retaining them longer.
73% recruiters opined that attractive compensation and benefits are key to reducing attrition. W.r.t to specific benefits,
– 55% favored competitive salaries and monetary incentives,
– nearly 40% said insurance benefits,
– 33% said flexible work arrangements, and 25% favored other add-on perks.
How are most companies really fighting attrition?
Most sales and manufacturing organizations have long used variable pay and performance bonuses to incentivize better-performing employees, and to increase retention levels. This approach also makes business sense to companies as they incentivize employees only after guaranteeing performance, and in direct proportion to it. However, with employees demanding more non-monetary benefits, companies have been forced to look at other means of rewarding performance and loyalty, such as stock options, health and welfare benefits, flexible work arrangements etc.
Types of Incentives Offered by Companies
90% of companies surveyed said they offer some form of performance-based incentive or variable pay to employees as a retention measure, whereas 30% said they incentivize loyalty.
67% said they only offer monetary incentives while 40% said they also offer non-monetary perks in addition to monetary benefits.
55% of the companies offer monthly sales-based incentives, nearly 30% offer annual bonuses, and only 10% offer profit sharing plans.
Type of Variable Pay Offered
Companies in certain sectors like Retail and Manufacturing have traditionally used variable pay to retain
employees, other sectors like IT; Consumer Goods and BFSI are now relying on variable pay to stem attrition. While the BFSI sector tops in the proportion of salaries offered as variable pay, the Logistics
sector offers the least percentage as variable payouts. Most companies use a combination of pay hikes and variable pay in their efforts to keep employees happy The BFSI sector leads in the proportion of salary offered as variable pay with an average of 19.5% while the Logistics sector only offers 10.9% as variable pay, on an average.
The Automotive, IT, Retail, FMCG and Healthcare sectors at 15%, 15.2%, 15.5%, 17.2% and 17.2%
respectively, all offer 15% or more of salaries as variable pay.
Variable PayAv. Pay Hike
Nearly 55% of companies surveyed said they offer individual performance bonuses
25% said they give out team bonuses, and
9% said they offer SBU-level bonuses.
Non-monetary incentives: increasingly finding favor
With employees, especially at the middle and senior levels, demanding more than just monetary incentives, many companies have been forced to introduce several other non-monetary measures to retain them. While some of these measures are in lieu of monetary benefits, others are offered hand-in- hand with existing monetary benefits.
Non-monetary benefits offered by companies covered in the study included stock options, trainings for
personal and professional development, flexible working arrangements, and health-related benefits for
families and dependents.
43% of surveyed companies said they offer some form of flexible work arrangements.
Nearly 70% of the companies said they offer training programmes to employees for professional
development while 30% of the companies also facilitate training programmes for personal development.
15% of the companies offer stock options to employees after certain durations of tenure.
Nearly 40% of companies said they offer health insurance for family and dependents of employees.
27% of companies also offer other perks such as fuel allowance, food coupons, club memberships
and exclusive discount tie-ups.
