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Attrition rate may go up 25% in 2011 with hefty hikes

Views 2 Views    Comments 0 Comments    Share Share    Posted by Presley 01-02-2011  

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Human Resource managers are devising ways to retain talent next year that will see companies paying annual increments up to 30%. The average attrition in 2010 was 10% across Indian companies, a rate that may rise to 25% in 2011-12 with improved salaries.

Employees treat a 10% pay rise as satisfactory and call it a boom year when salaries jump by 30%. Indian companies are forecast to grow 9% and salaried class expects higher increments during 2011-12.

Employers went for downsizing and pay cuts during 2009 soon after global recession and restored salaries in 2010. Recruitment officials say, generous raises will see more employees hopping jobs to make most of the good times but pose new challenges for HR managers.

“Salary raises and attrition go hand in hand. There have been a lot of ups and downs and the coming year is expected to be a boom year. Companies across sectors will dole out anything between 20% and 30% on an average during 2011,” says Sunil Goel, director, GlobalHunt.

Increments will almost be double than the 5-15% given in 2010, and the head of the Delhi-based firm specialising in executive hiring says companies will be more liberal in offering high salaries to stop staffers from switching jobs. “As and when market improves, the number of requisition always goes up in every organisation giving rise to attrition. The growth also stimulates salary hikes,” he says.

Head-hunting agencies say firms in high-growth sectors like infrastructure, energy and automobile will need to do the delicate balancing act of retaining talent while loosening their purse strings. Sudhakar Balakrishnan, MD & CEO, Adecco India feels that a few other sectors like IT and banking will see higher proportion of variable pay.

“Power, infrastructure (ports, airports, surface transportation, logistics) will witness buoyancy in hiring due to investments in these sectors. Some sectors like infrastructure and power will command higher increase (in salaries) due to paucity of talent,” Mr Balakrishnan said.

Mubeen Fathima Shariff, a senior HR manager at Bangalore-based IDS Softwares , says most IT companies will need to revisit their budgets to retain top talent. “Attrition continues to be a challenge. There are pent up expectations from employees due to high inflation and cost of living,”

Global staffing firm Kelly Services expects attrition levels to rise to 22% in 2011 and feels employees in customers dealings, team management and the niche technical roles will grab the lion’s share of increments next year.

“These (attrition and salary increments) are signs of a growing and dynamic market. Sometimes HR experts even call them hygiene factors,” the official spokesperson of Kelly said adding, “sectors hiring first will face the monster (attrition) first, unless there are strong retention or job rotation policies”.

Mr Goel of GlobalHunt however, views attrition as healthy. He says: “A balanced attrition is healthy for an organisation as it opens the avenue for fresh talent to come and create innovations and can add lot of value additions to an organisation”.

“Low attrition will block fresh ideas and people will become too comfortable in their approach. But, high attrition may not give an opportunity to individual and organisation to understand and to optimise strength. Broadly speaking, quick job hoppers will have difficulty to get a good job as they are not widely accepted for long term or larger roles,” Mr Goel remarked.
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