Mumbai: Some days, Ashok Sinha spends up to four hours reviewing what employees think of him. In September, the chairman and managing director of Bharat Petroleum Corp. Ltd (BPCL) and senior managers took two weekends to review staff performance and decide on rewards and new roles.
Retaining talent: Executives of BPCL at a training session. Oil PSUs are trying to hold back employees with higher pay and promises of overseas travel, more training, growth opportunities and job rotations.
“If I don’t do this, I probably won’t have a team left,” says Sinha.
BPCL, the country’s second largest public sector refinery, has become proactive in applying new personnel management tools to engage employees. The firm is facing one of the highest attrition rates in the Indian oil industry, although officials declined to say how bad it’s gotten. “Let me just say it has doubled over the last two years,” says S.A. Narayanan, human resources director.
With the entire industry troubled by rising attrition rates among senior staff and specialists such as geo-scientists and refinery engineers, public sector oil companies are radically changing their human resources practices to retain people: increasing pay, adding new feedback mechanisms and enticing staff with the promise of overseas travel, more training and job rotations.
The oil public sector undertakings (PSUs) have been losing people not only to private sector exploration and refining companies such as Reliance Industries Ltd and Essar Oil Ltd, but also to foreign recruiters and global consulting firms. Narayanan, for example, pointed out that many of his non-technical staff have gone to consulting firms such as Ernst & Young.
A study by consulting firm Hewitt Associates, commissioned by PSU oil companies, found executives at PSUs typically earn 60-100% less than their private sector counterparts. For middle management, the average fixed pay of Rs9.44 lakh annually compared relatively favourably with the market median of Rs10.11 lakh. But for senior management, the average pay is Rs14.34 lakh, about 82% lower than that of the overall market. At the director level, the fixed pay is Rs17.87 lakh, 81% lower than the market rate, says the Hewitt study.
These numbers are despite revenue per employee at public sector oil companies rising significantly. Revenue per employee at the country’s largest oil exploration company, Oil and Natural Gas Corp. Ltd (ONGC), for instance, has gone up from Rs36.4 lakh in 1997-98 to Rs1.6 crore in 2005-06.
“Unless we hike salaries significantly from mid-management onwards, nothing will change and people will keep leaving us for better pay packs,” says A.K. Balyan, human resources director, ONGC.
ONGC is another company that has been hit by high levels of attrition. The company has lost more than 100 key personnel such as geo-scientists and technicians who work on oil rigs.
So, ONGC is revising its policy to recruit former employees. “We are taking back geo-scientists who left us or retired as consultants,” says Balyan. The re-recruitment process is expected to be complete by the end of the year. Around 60 former employees may rejoin the firm. Balyan says the pay packages are likely to be substantially higher as they will join as consultants.
Earlier this year, while making presentations to the Sixth Pay Commission, the body that reviews public sector salaries, state-owned oil companies made a strong case for not only higher pay but also incentives such as variable pay and stock options.
To improve efficiency and accountability of government employees, the Sixth Pay Commission has asked Indian Institute of Management, Ahmedabad, to conduct a study on performance-related pay in PSUs. The government is also said to be mulling a similar model for public sector banks, which may be asked to offer incentives in proportion to profits or revenue.
Besides pay, human resources managers say they are trying to promote growth opportunities at PSUs because of their size and scale.
“For instance, PSUs can offer exposure to the overseas markets where they operate, rotation across functions, management and leadership training, work-life balance with better work hours,” says Subash Masters, head of government services at Hewitt Associates.
The country’s biggest oil refiner, Indian Oil Corp. Ltd, says it isn’t too worried by attrition. Human resources director V.C. Aggrawal says the company lost 165 engineers and chartered accountants last year—about 1.5% of its staff.
“Many of these are people who leave in the first couple of years of employment, so there is no way to assess what they may have contributed to the company in any case,” he adds.
The key is to identify and nurture high performers, says Ajay Soni, business leader at Hewitt. “With the opening of the economy, private players would obviously look at competent people in PSUs.”
BPCL has embarked on what it calls a “360-degree” feedback from employees—feedback from supervisors, subordinates, peers, stakeholders—which empowers them to also evaluate seniors while hearing from the company what future possibilities might be. “The feedback gave an insight into what could be in store for me in the company,” says Raju Natekar, deputy general manager of finance at BPCL. “It also gave me tools which would help me move that direction.”