Harish K Gandhim

"The year 2010 will test the ability of companies to hold on to top talent.

P Dwarkanath
Director, Group Human Capital, Max India

"Organisations that took care of their employees during the recession will fare better.

R Elango
Chief HR Officer, Mphasis

"Top performers will get attention. Our aim is to have a strong frontline leadership.

Kamlesh Dangi
Corporate Head, HR, Religare Enterprises

"We will not let people costs go out of proportion. But loyalty will be rewarded.

Piyush Mehta
Senior V-P, HR, Genpact

"We will beat high attrition rates by empowering managers at all levels.

***

Harish K Gandhi is a worried man. The Human Resources (HR) head of Gurgaon-based InterGlobe Group, which runs IndiGo, the country’s largest no-frills airline, looks at 2010 with not a little trepidation. “Our ability to retain top talent will be tested this year. It will be mayhem out there,” he says. Gandhi’s team has been working hard for some time to keep its flock together. During the slowdown, the group reoriented each unit’s business strategy from a quarter-to-quarter outlook to a three-year plan. Compensation and incentives for top talent were linked to the fulfilment of the three-year business plan. Several top performers have been handed out phantom stocks (deferred performance-linked stock options), deferred cash payments and loyalty bonuses.

Many other companies are trying to retain their top talent through direct employee interactions. Bangalore-based IT firm MphasiS, which has 34,000 people on its rolls, has started communicating with its employees through SMSes and its customised social network site. “Top performers will get more attention,” declares R Elango, Chief HR Officer of MphasiS, which is owned by Hewlett-Packard. A large part of MphasiS’ HR budget in 2010 will be spent on retention and leadership-development skills. “Our strategy is to build a strong frontline leadership,” explains Elango.

After freezing salaries for most of 2009, the company, like many of its peers, doled out generous bonuses in December last year, with top performers getting about 25% more. “We are making a conscious effort to reward high performers,” confirms Elango. Feedback from peers and customers is an important tool in this exercise.

Payback Time

The war for talent, especially smart, high-performing employees both within the company and outside, is set to become more intense in 2010. And one point has got HR heads across companies and sectors agreeing: what will matter most is how companies treated their employees during the crisis. “Organisations that had taken care of their employees during the recession will fare better this year,” says P Dwarkanath, Director, Group Human Capital, Max India. Dwarkanath oversees HR strategy for the 100,000-strong Max Group, whose operations range from financial services to healthcare.

As organisations integrate personal performance to business goals, the traditional performance matrix will see some changes. Fulfilment of performance objectives will get more weightage and result in handsome rewards. And the difference between performers and non-performers will become more distinct. “The variable component in compensation packages will go up,” says NS Rajan, Partner & Global Leader, Human Resource Advisory, Ernst & Young.

Geetanjali Lifestyle, the retail arm of the $1 billion Geetanjali Group, is looking to reward its companies more often. The company is moving from six-month performance reviews to quarterly ones. “We expect the retail environment to remain volatile with a lot of poaching of top talent,” says Debashish Dutta, CEO, Geetanjali Lifestyle. The company has also put an incentive plan in place to make the group’s employee stock option (Esop) scheme more attractive. Last year, it also sent about 35 employees from India to its retail stores in New York and Texas for a first-hand feel of the US market.

Different Approaches

The story is the same in other sectors. Even as the hospitality industry recovers from the slowdown, Patu Keswani, founder-Chairman of Lemon Tree Hotels, feels his focus on employees has helped the five-year-old entity attract top talent from the industry. “The company has been built for employees,” asserts Keswani. Thanks to its Esop scheme, the mid-market hotel chain, which has a dozen-odd properties, now has several millionaires in its workforce.

On the other hand, business process outsourcing (BPO) company Genpact is following a different approach to tackle attrition. “We are empowering managers at all levels,” says Piyush Mehta, Senior Vice-President (HR). The focus is on enhancing engagement with employees, he explains.

Companies usually decide on their HR spends for the next fiscal during the first three months of the calendar year. But most would not want to rely solely on attractive compensation packages to retain or attract top talent, feels Sandeep Chaudhary, Practice Leader (Performance & Reward), South & West Asia,

Hewitt Associates.

A healthy work environment, a bouquet of incentives linked to personal and company performances, and skill development initiatives may make existing employees stick with their employers. “Employee engagement gets you better results in the long run,” says Chaudhary.

Agrees Kamlesh Dangi, President, Human Resources, Religare Enterprises: “We will not let people costs go out of proportion.” Though bonuses will be better in 2010 (in the range of 8-12% as against 6-8% last year), the loyalty factor—of sticking around in bad times—will be given adequate weightage, he adds.

Measured Steps

Most companies seem to be wary of starting off another wage-hike spiral, having learnt some hard lessons during the slowdown. “Attrition is likely to go up. But we are clear about not giving in to the undue aspirations of employees. Our bonuses will always be linked to the performance of the company,” says YV Verma, Director (HR), LG Electronics India.

The company plans to finetune its five-year career plan for each employee. “We will encourage higher participation in management-related jobs. Also, job rotation will be an important part of our engagement programme,” says Verma. The consumer electronics giant plans to add 800 more employees this year.

HCL Infosystems’ annual manpower budget, which has been rising by about 25% annually for the last three years, is at Rs 300 crore for 2010. As part of a restructuring exercise, the IT services major has increased the number of senior general manager and vice-president positions in its top management team to 120 over the last two years.

“If employee engagement initiatives are the icing on the cake for any human resources department, I would prefer having a well-baked cake first rather than putting good icing on a bad cake,” says Vivek Punekar, Vice-President (HR), HCL Infosystems. The company’s HR initiatives will revolve around connecting more with core employees, he adds.

Even as the war for talent heats up, those at the top have to keep delivering the goods and go beyond expectations. Corporate Executive Board, an advisory body for HR heads, found that a common concern among most HR heads is that there are quite a few half-baked leaders at the top.

In the boom years, many employees focused on getting promoted rather than on growing laterally. Many of them will now be under pressure. “Employees who have risen up the ladder are expected to deliver more with fewer resources,” says Shaurav Sen, Managing Director, Corporate Executive Board.

That means, while reaping the gains, those at the top will have to slog harder to stay where they are.

With inputs from Anurag Prasad