Fresh from listening to 40 Indian CEOs commiserate over retention plans gone awry and a seemingly shrinking labour pool, Paul C. Reilly remains bullish on his prospects for finding great leaders in the Indian economy.
But what else can be expected from the chief executive and chairman of a company paid to do exactly that day after day? Reilly heads Korn/Ferry International, an executive search firm on the front lines of the hunt for global talent.
He is sitting at the posh Trident Hilton in Gurgaon, the Delhi suburb transformed into a hub of business process outsourcing—a sector plagued by attrition rates as high as 70% in some firms. In many ways, there couldn’t be a better setting or better time for Reilly’s optimism. “In a market like India today, how do you focus on keeping your top talent?” he asks in an interview with Mint. “There’s a real supply-line crisis and the issue is how do you get people well educated? How do you develop the talent you have?”
In New Delhi and Mumbai last month to meet with both Indian employees and the firm’s clients, Reilly’s visit came on the heels of a Korn/Ferry report surveying companies’ top brass on which geographic markets most influence the macro business environment. Nearly three-quarters, or 72%, of respondents chose Asia, exclusive of Japan.
But when asked to rate the performance of Asian business heads, less than 20% considered them to “greatly excel”, compared to the 50% of respondents who said their US counterparts do. In Korn/Ferry’s report, this triggered a discussion on the best ways to reform Asian business leadership, from adopting western ways to better succession planning to hiring returnees and expatriate executives.
“India has been a great beneficiary of inbound business, but now Indian companies are becoming multinationals themselves,” says Reilly. “When we ask executives about India, they see the opportunity for global talent. But they rank India low on growing and succeeding that talent.”
India’s struggle with finding and hiring talent, at all levels, represents a global dilemma for managers, Reilly assures, shared by the developed US and hyper-growing China.
“There’s been a transformation,” he says. “We now have an employee group we call free agents. Employees think, ‘I can only count on myself’.”
In India, attrition levels have been steadily rising, ranging between 12% and 15% in information technology services, according to the National Association of Software and Services Companies. At non-voice BPO firms, the rate jumps to between 25% and 30%, while call centres report attrition between 55% and 70%.
To the CEOs who cited their high numbers jumping ship, Reilly offers solutions that tend to be more pre-emptive. Higher pay, he says, is rarely the answer because a worker who leaves one organization for more money is likely to leave the next employer, too. “No. 1, they leave because they don’t like their boss,” Reilly says.
While salaries in the trenches have skyrocketed across India, they still don’t come close to what their western counterparts get. But the same cannot be said of Asia’s managers—who Reilly estimates earn close to or above the six-figure dollar salaries common for executives in the US and Europe. But if a guy with two years of experience becomes the company veteran and scrambles up the corporate ladder, is he really worth it?
To that, Reilly pauses and asks a counter question: “Is Beckham worth $250 million to play football in Los Angeles?”
And then he gets serious and down to the bottom line: “If an executive can affect leadership to impact a company by even 5%, that’s a huge number... critical for companies. ...People are becoming managers quickly everywhere. If you’re flexible, quick and smart, people get promoted quickly.”
Seated next to Reilly, Korn/Ferry’s India head Deepak Gupta adds a cautionary footnote: “Indian companies, historically, have relied on older managers, so the wave of new young corporate leaders results in communication and generational gaps in the workplace.”
Respondents to the recent study overwhelmingly suggest Asian companies marry elements of eastern and western companies. According to the managers surveyed, 36% felt globalization warrants combining best practices, while less than 2% agreed that the western model was superior and should be adapted by Asian companies.
Yet, in a growing economy, managers might not have the time to stop and intellectualize such issues, to pause and ask themselves: Have I rewarded my high performers today? Are all my employees aware of my mission? Are my middle managers feeling the squeeze?
“People are fighting just to keep up with what they’re doing,” Reilly says. “Some of the problem when you’re growing fast is that you mean to tell people something and you never get a chance. But the more you can tell people every day that they’re doing a big job, a good job, the less turnover you’ll have.”
Managers surveyed say Asian hires who have lived overseas are preferable. “Just as India’s diaspora has helped to develop its information-technology and private-equity industries, China’s returnees could fuel the next business leadership revolution,” the report says. But it goes on to say that the problem with hiring returnees is—you guessed it—the same retention factor. They are in demand globally, might want to go back to the West and have different professional expectations. The study also cites “possible conflicts between local staff and returnees” over pay and work styles.
In his visits across Asia and 24x7 conference calls with Korn/Ferry’s global workforce, Reilly has seen the evidence of the growing pains of globalization. He suggests companies and their leaders admit weaknesses and make smart hires around them to compensate, to leverage the expertise of the old with the enthusiasm of the new. “You go to these cities and you wonder if you’re losing something that makes them what they are,” Reilly says. “People have to be culturally sensitive as you become a global company. ...There needs to be a balance.”