The Transience of Tenor: How the IT Industry can Cope
from the market. If an employee stays longer than three
years in the organization and progresses up to a level of
senior management, the employee is cost-eff ective as
well as helps the organization to retain the knowledge
built over the years within the fi rm. Hence, from a cost
perspective, promoting leaders coming from within DNA
of an organization looks like a more favorable option
than to hire talent from outside. This is only possible if
companies start investing in learning & development
initiatives at the entry level bands in the organizations.
This also ties in with the fact that large and mature
organizations have started leadership development
programs for campus recruits and give them the
opportunities across all the major functions to help them
develop a holistic understanding of the organization.
Looking at Tier 2 & Tier 3 Cities Diff erently
HR leaders and business leaders today are trying to fi nd
new and innovative ways to tackle the high attrition rates
by exploring solutions which have a long-term impact
on business. For this very reason, organizations today
are shifting some percentage of employee bases to Tier
2 and Tier 3 cities. Apart from the obvious cost factor,
it is presumed that Tier 2 and Tier 3 cities have more
stickiness as compared to Tier 1 cities. Primary research
within the Aon database throws light on the validity of
this assumption.
Interestingly and not to our surprise we found that
across diff erent sectors (IT services, IT products, thirdparty
service providers and banking GICs) covered as
a part of our primary research, attrition rates are lower
in Tier 2 and Tier 3 cities with overall average tenure
higher as compared to Tier 1 cities. Moving to Tier 2 and
Tier 3 city helps management control attrition but more
importantly reduce cost as the talent available is prepared
to work closer to hometown at much lesser cost as
compared to any Tier 1 city.
IT Services
Source: Aon Hewitt Research
Source: Aon Hewitt Research
Source: Aon Hewitt Research
Source: Aon Hewitt Research
Reward Mechanism to Increase Employee
Tenure in the Organization
Maintaining the right balance between Tier 2 & 3 and Tier
1 cities is the newest solution to de-risk attrition rate and
control cost. This change however, requires some prerequisites
such as – assessment of the potential cities for
availability of relevant talent; cost of setting up operations
in the city; political and economic stability of the chosen
city.
However, moving people across diff erent cities is
not the only solution to address the issue of controlling
attrition and increasing employee tenure. There are other
rewards and non-rewards aspects that organizations need
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