Attrition woes hit consumer goods industry

Attrition woes hit consumer goods industry
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First Published: Wed, Jan 23 2008. 10 48 PM IST

Port of call: FMCG companies such as Dabur India Ltd say they find it increasingly difficult to retain good people these days, and if 2007 was bad, they expect 2008 to be worse. (Photo: Rajeev dabral/
Port of call: FMCG companies such as Dabur India Ltd say they find it increasingly difficult to retain good people these days, and if 2007 was bad, they expect 2008 to be worse. (Photo: Rajeev dabral/
Updated: Wed, Jan 23 2008. 10 48 PM IST
New Delhi: It isn’t the sector most people would immediately associate with a 20-25% attrition rate, but India’s fast moving consumer goods (FMCG) industry is witnessing a bloody battle for talent and seems to have become the first port of call for companies, especially those in new businesses, that need people in a hurry.
Audit firm KPMG’s director Mazyar Kotwal said the problem faced by the FMCG industry is no different from that encountered by others. “The talent pool remains the same and when companies start a new business or a product line, they need experienced people to get started,” he added. “The easiest way out is poaching.”
Experts say the attrition rates in the FMCG sector is between 20% and 25% and that there has been a 5-6% increase a year in the past few years.
Port of call: FMCG companies such as Dabur India Ltd say they find it increasingly difficult to retain good people these days, and if 2007 was bad, they expect 2008 to be worse. (Photo: Rajeev dabral/Mint)
“The year 2007 was worse in terms of attrition because of a lot of momentum seen in the market,” said James Agrawal, head, BTI Consultants India, an executive search firm. He said he expects 2008 to be as bad. A. Sudhakar, executive vice-president, human resources, Dabur India Ltd, said it is becoming increasingly tough to keep good people in today’s times.
“There’s a wider playing field for marketing professionals today given the ever increasing number of job positions,” added Puneet Avasthi, vice-president, retail, IMRB International, a market research firm.
The problem is exacerbated by the fact that FMCG companies, after a few years in the wilderness, are beginning to grow again. The industry, which is worth Rs70,000 crore by sales revenue, is currently growing at around 12% a year. According to a CII-AT Kearney report, it will grow to Rs143,000 crore by sales revenue by 2010.
Some of the people who leave FMCG companies go to other FMCG companies. However, several other sectors have been aggresively hiring from the industry. “Traditionally, organizations such as Hindustan Unilever Ltd, ITC Ltd, or Britannia Industries Ltd (all three are FMCG companies) have set high benchmarks for quality talent by hiring people of certain calibre and developing them,” said Agrawal.
“Therefore, the sector lends itself as a happy hunting ground for good talent.”
Consumer marketing was once limited to FMCG companies, according to a recruiter. Now, with an increasing number of sectors becoming customer-centric, this industry has become a talent feeder, said R. Suresh, managing director, Stanton Chase India, an executive search firm.
Companies in sectors such as banking and insurance, retail, media and telecommunications hire executives from the FMCG industry.
“We have placed many executives from FMCG companies in sectors such as banking and retail last year not only in marketing function, but also in the finance and IT support roles,” added Suresh.
Highest attrition levels are seen in sales. One reason for this is the fact that companies in the FMCG sector are themselves hiring more salespeople. Another reason is that insurance and telecommunications sectors are also hiring such people. At PepsiCo India, according to Pavan Bhatia, executive director, human resources of the company, the proportion of people hired in sales to total hires increased from 20% in 2006 to 70% in 2007.
Attrition may be bad news for FMCG companies, but it has meant an increase in salaries for executives in the business. “Very often executives from FMCG ask for compensation that is 20% to 30% more than the industry norm (when they switch jobs, sometimes sectors) and (the hiring) companies don’t even blink,” said Agrawal.
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First Published: Wed, Jan 23 2008. 10 48 PM IST