Mr Malhotra pensively sat in his office late on Saturday evening, after all the staff had left. He finally accepted that he had a problem. His business was suffering and had been in decline over the past year or so. There had been signs but he had dismissed them as aberrations caused by minor market fluctuations and nothing to be overly concerned about. However, after a year of consistent failures he knew that he had to identify the problem and do something to fix it before his business went belly-up.
Rakesh Malhotra graduated from one of the best business schools in India in 1998 and joined one of the world’s largest FMCG brands. Having moved through a couple of functions as a management trainee he finally found his niche in the role of Talent Acquisition manager. A man of entrepreneurial instincts, he quickly identified the vast growth potential of talent sourcing in the future. After having spent 6 years in the organization he decided to start his own company and thus was born SkunkWorks Consultants, a recruitment consultancy.
The Early Years
After struggling with the initial teething problems in the first year of making his company come across as credible, he finally managed to score a big win by fulfilling 5 niche skill requirements for a global IT giant. This set the tone for the first couple of years when he made a name for himself by sourcing talent in niche skillsets for IT firms.
Gradually though he started to move away from IT and ITES and build a name in talent sourcing for Sales & Marketing, Finance and HR roles for product-based organizations in the FMCG and Pharmaceutical sectors. SkunkWorks also grew over the next 8 years and now had 30 full time recruiting consultants working under its roof. He had also started to offer more specialised services apart from the dated body-shopping model of traditional recruitment consultants. Over time he had built some very close relationships with some of the biggest brands and was a trusted partner for their talent needs. These organizations had also begun to use his help in global recruitments for their offices in other countries in Asia and Latin America.
Over the past 15-18 months though, SkunkWorks had been suffering. A lot of the potential recruits had rejected the profiles and offers they’d been made and a significant number of people that they had placed over the past 30 months had not worked out. Employees that SkunkWorks had painstakingly screened and recruited for some of their oldest customers had left the organization citing personal reasons, many had said they did not see a defined career path in the organization, and many had left when they were asked to take up positions in different locations.
And the reason he had denied having a problem for so long was because there did not seem to be any common factor in the grounds employees cited during their exit interviews across various global locations. However, he now knew that there was a problem and he would have to do some research to find out why all these seemingly talented and perfect people weren’t working out.
Understanding the Problem
So why was Mr Malhotra facing problems in finding the right fit between organizations and employees? Why were so many people leaving after only spending a few months in organizations that were considered global brands?
The problem doesn’t lie solely with Mr Malhotra and SkunkWorks. The organizations are also to blame. However, as a recruitment consultant Mr Malhotra should’ve seen this coming.
Their problems were basically two-fold. The first issue was that they hadn’t kept abreast of the changing labour market scenario. The second issue that they hadn’t identified thus far was that they were trying a ‘one size fits all’ strategy in identifying talent.
The Market Has Changed
One of the most important things Mr Malhotra forgot to take into consideration was the massive change the labour market went through in the past 5 years. The entire demographic of the market changed. The most important change was generational; the majority of the talent that was entering the market now being millennials. They had grown up in a very different kind of environment than their parents, with economic stability never having been a problem. As a result the attraction drivers for a role or an organization were very different for millennial talent as compared to the previous generations.
The above data, published by one of Corporate Leadership Council Executive Board (CEB)’s ground-breaking studies, shows those attraction drivers which millenials rate higher and lower as compared to the older generations. This chart clearly shows that the millennial generation puts a lot more emphasis on career development and future growth opportunity. They are always looking to grow in their careers and want to take up assignments that would add value to them and make them more desirable for future career opportunities, possibly in other organizations. Another very interesting thing to note is that they place a much higher importance to factors like vacation time and job-interest alignment.
The other end of the spectrum makes for even more interesting reading. Some of the most important ‘traditional’ attraction factors for any job like retirement benefits, or job stability are things that the millennial workforce gives little importance to. Another thing to note is that compensation, still considered by many to be the most attractive feature of any position meets a similar fate. It shouldn’t be construed as the millenials not considering these factors important; however these are factors they place less importance on while deciding on the attractiveness of a job.
Another thing that Mr Malhotra did not consider was that what attracts people to a job, and what keeps them at that job may be different things. The below data from CEB shows the different Attraction and Retention Drivers for the global workforce.
What Mr Malhotra and many of the organizations had not considered was that while factors such as compensation, stability etc. prove very good tools in attracting people to an organization, they are not always what keeps them there. The below data published by CEB shows that although people are never too hesitant in jumping ship when it comes to money, compensation may not necessarily be the most important factor in making that decision. People are more prone to leave if they don’t see any future career opportunity and also because of bad managers.
Data in the above figure represent the Percentage of employees who chose the attribute as one of the five most important when evaluating an employer (1) and Percentage of former employees who chose the attribute as one of the five attributes with which they were most dissatisfied with their former employer (2). As can be clearly seen, there are some major points of divergence between both, something which both parties did not take into cognizance when coming to person-job fit decisions.
Understanding the Differences is Important
Another important avenue where Mr Malhotra went wrong was in not understanding the differences across labour markets in different countries. People across geographies now expect very different things from their jobs. It is not easy to sell the same employee value proposition to people in different locations.
Not only are the attraction drivers of a job different in different regions, the drivers of a specific region have also undergone a major shift over the years. And this shift is still in motion.
The above report shows the percentage of employees who would consider a job change given a specific enticement and quarter-over-quarter change by region. A stark contrast can be seen in the Latin American workforce as compared to the Asian and European workforce. Whereas the latter are quite easily swayed by the money, Latin American countries put money and benefits at the bottom of the top 5 important factors and even there their importance is dwindling as can be seen by a decrease in impact of 4.8% in compensation and a massive 6.1% in benefits. It can be seen that prestige plays a big part in making job switches more attractive in Latin America (perhaps this has ties with Latin American culture), and we can see how growth opportunities and senior positions hold much greater sway. Even in Asia and Europe, where Compensation ranks #1, its importance is dwindling in Asia but rising in Europe.
Mr Malhotra decided to research a little more into some countries that were of specific interest to him in order to find out what would work better to attract talent and the findings were astonishing in the breadth of the spectrum they presented.
He had been working closely with a German consumer goods manufacturer over the past 4 years and had tried to staff a lot of their middle management positions in India and also tried to do the same for their new offices in China and Indonesia. He had worked closely with the parent company and spent a lot of time in trying to understand and replicate the ways in which the company had attracted and retained top talent in headquarters. Needless to say the strategy hadn’t worked out very well for him in the past couple of years and now he saw why.
In the Asian countries as seen above, future development opportunity is now seen as a critical factor in attracting and retaining talent. And development opportunity need not necessarily refer to vertical growth i.e. promotions, even the chance to work across a greater breadth of roles is very important. So companies like SkunkWorks’ German client that generally preferred having their employees work in specific job roles only may not find that strategy yielding dividends in other regions as proved the case in India, Indonesia and China, where employees soon grew disillusioned at the lack of a career path and chose to leave for competition that could offer better growth prospects.
In another example of their short-sightedness they chose to put employees from India in Chinese holdings where work-life balance isn’t too important as opposed to India where it is critical. They also did not consider that Indonesian people value the ethical image and integrity of a company highest, and therefore they would not have been very eager to work in a company that had come under the scanner under allegations of underhanded practices in order to win more contracts, like this particular Skunkworks client had. Therefore, it is safe to say that their recruitment strategies were doomed from the start.
The Way Forward
Now that the problems in the field of recruitment strategy have been identified, what is it that Mr Malhotra and indeed the industry as a whole must do to come up with more effective recruitment practices?
The answer is quite simple - Understand what it is that people want. And once you’ve done that, communicate which among those desired factors you can already offer while at the same time building on creating your strength in the other fields. Companies also need to identify the divergent needs of the different markets they cater to or wish to enter and build EVP capabilities that can meet those needs.
Another CEB survey on the Indian labour market shows what it is that Indians look for in a job.
Based on this survey, it can be easily seen that compensation –though important -is not what most attracts people to a job. In the Indian context, work-life balance is now playing a really big part. So companies need to talk about their existing policies regarding flexible work timings, work from home facilities, extended maternity leave etc. and build these if they don’t exist as this will be prove a major differentiator in the coming years.
Similarly when we talk of compensation and benefits, companies need not always focus on increasing cost of capital but rather on communicating the various components of their pay and the various health/medical benefits and performance rewards they offer which are different from competition. Clearly communication will be key.
And most importantly, what has been seen from research is that people need to know they are in an organization where they will grow. It is very important for an organization to design and promote clear career paths for their employees if they want to cut down on attrition.
To sum up, it has become imperative for organizations to understand that the playing field has changed, and also that this change will not stop. The particular demands of a labour market will continue changing and organizations need to keep up if they want to succeed.
- Nadeem Raj
Nadeem is still trying to make sense of Life, the Universe and Everything having just started his second year and planning to have a great time while he tries to figure all that stuff out. You can follow him at nadeemraj.insideiim.com
He's an amateur storyteller at 42shadesoctarine.wordpress.com