First the bad news. Attrition problems are getting any better for Corporate India. A new study reaffirms what we have known all along – the turnover is hitting firms where it hurts the most, their bottom lines. According to estimates, it accounts for more than 5 percent of a firm’s operating costs. And it’s not just one sector that is reeling from the blow. According to talent technology firm Global Talent Metrics, the annual attrition rates are as high as 30 percent across industries. BFSI with 44 percent and BPO with 35 percent are among the worst hit casualties.

As attrition reaches epidemic proportions, corporate boardrooms have turned into virtual war zones where HR heads and independent experts work out robust recruitment and retention strategies.

However, efforts alone don’t translate into rewards. A case in point is the use of HR metrics. A sound HR metrics program enables the organizational management to collect consistent information about employees, which alleviates decision-making. It also ensures that management and development activities remain relevant with the overall business strategy. However, over-enthusiastic HR heads forget that developing metrics requires a lot of thought.

Dr. John Sullivan, formerly a Chief Talent Officer at 43,000-employee strong Agilent Technologies and currently a management professor at San Francisco State University observes, “A good number of firms make the same two errors while developing and implementing metrics. They create HR metrics in a vacuum and they create more metrics than they can maintain and utilize. Avoiding these errors does not guarantee success by itself but they prepare you to handle roadblocks along the path to using world-class metrics in your organization”.

HR practices have a direct impact on general business performance. Typically, the most significant HR practices are viewed from 6 perspectives: rewards and accountability; flexible administration; recruiting and retention excellence; communications integrity; dedicated HR service technologies and prudent application of resources. Most research analyses have shown a strong correlation between these practices and a 30% increase in shareholder value.

Thus, each set of metrics should contribute to business performance and provide an insight into productivity assessment and resources appraisal, which lead to efficiency gains and customer experience improvement.

Typically, HR metrics are classified in three key categories: historical, real-time and forward-looking. An HR strategy should specify the starting point of business development in order to assess the motivation and future impact of the changes in the HR profile and general business structure. To evaluate the business development, the HR can either use its own historical data or benchmark its organization against other similarly sized businesses or industry ‘best of breeds’.

The essence of a hiring strategy is to fill the gap in the process that is currently being followed. At present the approach is to “see” what the potential hire can do by measuring the ability and personality measures. The sub set is to gather information on the potential hire has done by using a 3 pronged approach of skills test, behavioural interviews and back ground tests. Dr Cabbot Jaffee, Chairman, Global Talent Metrics, emphasises that for hiring effectiveness and future job performance it is imperative to look at “what the person wants”. Here is where the HR metrics have a paradigm shift of the 6 perspectives to focus on culture, demographics and psychographics.
Dr Jaffee’s firm Global Talent Metrics conducted a research on factors impacting employee attrition among white collar workers across industries. The research was developed and survey was conducted over the last 12 months and includes responses from 5000 employees of companies across industries. The survey probed the role of demographic, psychographic and sociological factors in predicting attrition and organizational factors that attract individuals or cause them to leave a company.

The study was carried out in partnership with IIM-Bangalore & AlignMark Inc., a US-based pioneer and leading tools and services provider for optimizing human capital resources. Outlining his plans to help Indian corporates fight attrition, Dr Jaffee said, “The challenge of attrition though not unique to India is unique and intense in a manner not seen in other markets across the world. This makes it imperative that any knowledge or psychometric tool in this area be locally validated. We are committed to investing in R&D that will help companies improve how they source and select their talent. Our product StarSelect will allow companies reduce the cost and loss of managerial productivity associated with candidates not starting post offer or leaving within the first 6-9 months”.

While firms like Global Talent Metrics may still be few, their emergence is steady and that undoubtedly is good news for HR managers across India Inc.