In charts: Why India Inc is finding it tough to retain talent | Mint

In charts: Why India Inc is finding it tough to retain talent

Information technology, banking and financial services, and fast-moving consumer goods segments have suffered the worst of attrition. (File Photo: Mint)
Information technology, banking and financial services, and fast-moving consumer goods segments have suffered the worst of attrition. (File Photo: Mint)

Summary

India’s largest companies have faced a myriad of challenges in recent years in terms of holding onto their employees. The median attrition rate of BSE 100 firms stood at 17% in 2022-23, up from 10% in 2020-21 and 15.4% in 2021-22

India’s top listed companies appear to have a growing problem of retaining talent. The median attrition rate of BSE 100 firms stood at 17% in the year ended 31 March, sharply up from 10% rate in 2020-21 and 15.4% in 2021-22, showed a Mint analysis of disclosures made by the companies in their annual reports. Women consistently dropped out more than men.

The figures pertain to a set of 73 companies that declared their turnover rates in each of the last three years. The turnover rate refers to the number of staff members who leave an employer—voluntarily or involuntarily—as a percentage of the average strength during a period. A little over half of the companies have seen two back-to-back years of increasing employee exits, 42% of which have seen the rate rise by over 10 percentage points since 2020-21.

The reasons are many. First, it was the economic upheaval caused by the pandemic; then the “Great Resignation", which took an ugly turn as companies handed pink slips during cost restructuring. Voluntary exits also became common, as work-life balance, pay disparities, career growth concerns, workplace culture, and employee well-being increasingly took centre stage. A survey by Indeed and Forrester Consulting in March revealed that a “vast majority" of employees in India were dissatisfied, stressed, and not thriving at work.

“It suggests a shift in employee preferences towards better opportunities and work conditions," said Navneet Singh, founder and chief executive officer (CEO) of Avsar, a recruitment consulting firm. “It also reflects poor adaptability of companies in retaining talent during these challenging times."

Information technology (IT), banking and financial services, and fast-moving consumer goods (FMCG) segments suffered the worst. “This reflects industry-specific challenges, such as high competition for tech talent in IT, market fluctuations in BFSI (banking, financial services and insurance), and competitive pressures in FMCG," Singh said.

The gender gap

The median attrition rate stood at 19% for women in 2022-23, higher than 16.6% for men (but both are up from 12.5% and 9.7%, respectively, in 2020-21). “This period has seen women disproportionately impacted by layoffs and resignations due to a combination of systemic, social, and economic reasons," said Pallavi Pareek, founder and CEO of Ungender, an advisory firm. “Women were also more vulnerable as they work more in some of the sectors hit the hardest by the pandemic, such as hospitality, retail, and tourism."

In addition, those who are in roles that their employers use primarily for diversity purposes, or for supporting, non-essential activities, are typically the first to face the axe during job cuts, Pareek added. Considering the diverse challenges women face, the problem demands a holistic approach that ensures not just women’s retention but also their growth and well-being, she said.

Family-friendly? Maybe.

Employers can take some solace from the loyalty shown by employees going on parental leave. In their 2022-23 annual reports, companies declared two ratios related to parental leave: return-to-work (the share of employees returning to work after the leave), and retention rate (the share of employees who stay on for 12 months after returning to work following the leave). Both ratios exceeded 90% for many companies.

There were some outliers. Among the 83 companies with this data, 18 had a retention rate of 75% or less. “These discrepancies highlight that not all organizations provide the necessary support for returning parents," Pareek said. “The absence of facilities like daycare can be a significant barrier. Returning parents often grapple with emotional and logistical challenges. If companies don't offer flexible hours or a gradual reintegration into the workplace, they risk alienating these employees."

However, low retention rates after parental leave may not always reflect a lack of supportive policies and could have similar reasons as high overall attrition.

What’s the trick?

Retaining employees—whether after parental leave or in general—will need employers to be more attentive to the pulse of the workforce. Companies are learning this the hard way, by adapting to changing realities, trying harder to ring-fence their critical talent. “Flexible or part-time work is not the panacea to all problems," said Nirav Patel, partner at Uniqus Consultech, a consultancy. “A lot of CEOs are now focusing on organizational culture. That's where the chain starts."

Singh said initiatives such as competitive pay and retention bonuses, robust professional development programmes, and increasing focus on well-being, diversity and inclusion could help curb attrition.

All this also turns the spotlight on transparent reporting by businesses around matters of sustainability and diversity. Some of the data analysed by Mint was reported by companies for the first time under new regulatory guidelines that became mandatory from 2022-23. It’s clear that with mandatory disclosures, firms have begun to focus more on employee welfare. Some large companies, including Bajaj Auto and Bandhan Bank, have launched their paternity leave policy over the last year or so.

Patel lauded such guidelines, describing them as comprehensive compared to international frameworks, but said there was still a lot of ground to cover. While the disclosures are mandatory, what goes into it has little oversight or regulation, he said. (The Mint analysis found a few annual reports that had reported incorrect metrics under the attrition data; such companies were excluded.) Also, with just one year’s data on return-to-work and retention rates, Patel said a meaningful trend would emerge only over time.

This is the second of a two-part series based on the analysis of BSE 100 annual reports. The first part covered representation of women and disabled people in the workforce.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more

topics

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App