Employee Retention - A big challenge

Employee Retention: A big challenge for small IT companies

Today perhaps no other Industry is more people dependent than the IT industry. And the role of IT is increasing at increasing pace. Movies. Products. Every where. The reason is that marketing efforts try to differentiate the same or similar equipment, merchandise or whatever, by adding features of automation, artificial intelligence and knowledge. Thus the role of Microprocessing and automation is increasing. Role of IT is increasing. More and more equipment getting more and more intelligent. More and more of information being exchanged over more and more corners of the world, putting load on increasing bandwidth and using more of the broad band.

It is also true that the Internet has started squeezing and shrinking the globe. Connectivity requirements have increased. Internet has been let free to the people who have started applying their minds as to how to use it. This has lead to opening of more avenues of information sharing. More ways to put information on the net. Raising more issues of securing information.

It is not easy to understand how much power has been unleashed through this. And that this has reached hands of the commercial entrepreneurs. The entrepreneur, i.e. the business commune, is willing to invest money in to the IT area. And more and more opportunities have been researched and opened. Opportunities to whom? To those who have ideas.

How do they implement their ideas: through wizards of technology : the s/w engineers

Therefore, it has escalated the situation, and the gap between the Demand for qualified and competent people who convert data in to gold has increased. Greed is there as the opportunity is there. Opening of opportunities has lead to scramble. But it is a technical and a specialized expert manpower that matters. The supply was already limited and with ever-growing opportunities the gap between demand and supply has increased. The world is opening its wings and as more people realize the power, the mad rush increases to get some people on to their sides, which means pinching people by the have-nots from the haves. Companies, I mean here.

And let us accept this. Period.

So much so for the employers side.

As for the employee is concerned he gets another opportunity to exploit (or best utilize) his or her skill on the computer and the IT boom. For the Software Engineer the situation has created

  • More options
  • More venues to satiate desires
  • More work to do
  • More opportunities
  • More places to work in and because of this the attrition rate is spiraling at over 40% in many companies.

In the past, the situation was always that of demand led the supply by far. Thus there is an increased flight. Talk to any Software Engineer; Search his pocket: to discover three offers, Tickets to fly and so on!!! Hold the flying man! Poof! Gone! Smaller Companies have been stripped of manpower and skeletoned and there are no hands to work! (I mean brains to work). Thus they can't earn enough to survive and an easier option for them is to look for larger fish and lure them to eat them up.

Advantage 1 is hidden in this. These companies have quickly realized this and have offered stock option plans to their employees so that when they get eaten up, the employees make at least a ton of money each. And the employees wait for the ultimate to happen. And this has become the formula number 1 for the retention.

But that will hold people for some time only. As the smarter of the people have started looking at companies that are bought or potentially will be bought by bigger of the bigger fishes. And faster than their own!

Employer Folks, please remember that one formula is not enough to retain employees. The old funda of salary hikes has got a new twist. Give pays hikes faster. Half the industry is now giving hikes twice a year. That is Formula 2 for retention.

Culture is the funda 3, environment funda 4, work funda 5 is the other. Funda 6 is to build a niche around your company's name. An aura! But remember Bund Mutthi to lakh ki, khul gai to khak ki! . Therefore, manage things very carefully. Add gusto by pegging to big names, big customers.

Grow. Keep growing your Company in terms of numbers. That is Funda 7. People perceive a shrinking software company as a closing company. While growth in a growing Company infects enthusiasm and people join in hope. The interviewers themselves are very enthusiastic. That's what fetches more confidence into the interviewed person. Confidence that something good is happening. Others already in the Company hang on to see what new things are coming. This means automatically: a higher retention!

Funda8 is to keep an eye at business. Keep having a lot of projects and new ones trickling. Money will automatically come and so will prosperity and so no one will leave. Immediately.

Give them what they want!!! Funda9. All s/w guys at one time or the other want to go to US. Why lose them to market. Send them where they want to go. How is some thing that you need to figure out? There is no short cut to success. So you must have the right size of investment. Have a right number of people employed in the US to market your work force. I reiterate that there is no short cut to success.

I agree all that requires vision. And money. Where do you get the money? Capitalist! Venture Capitalist to be precise. Why will they buy your idea? Because you will sell it to them. How? Simple. Through an impressive business plan. And that is the next funda, number 10. So get a sharp IIM guy to make a good plan. Remember that a good bhel puri is one, which has all the components, and in the right ratio and in the right quantity. Given at the right time keeps it crisp and does not become soggy.

Please remember that there is a minimum size of sustainable business. And when you have the right size of manpower, each part of the organization is well catered for. The company will keep growing. It will bring about enthusiasm. And remember, as enthusiasm is infectious people will get enthused and in their enthusiasm, that we HR guys technically call motivation, the employees will stay on.


If you do not provide for the rights as described above, there is a shrinking spiral. While on the one hand I see growing companies grow by attracting and retaining, I also see shrinking companies shrinking by losing people to the growing ones or the newer ones which will later grow.

If you can't have the minimum sustainable business or investment, Sell quickly!! And let others grow and retain people. Why struggle to try to retain the unretainables!!!!

Rakesh Nayar
A HR Professional

Career Counseling
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