Employee turnover levels as high as 100% in some industries is the largest workforce challenge hindering performance for organizations operating in India according to research from Right Management and faculty at the Villanova School of Business.

The survey found that a major cause for such extreme turnover is that managers lack the fundamental skills necessary to effectively lead and engage their teams. Employee retention in India is more influenced by a direct managers' skills than concern for compensation, advised Michael Haid, Senior Vice President and Global Leader for the Attract & Assess Center of Excellence for Right Management. "Most employees are seeking opportunities for growth, progress and pride in their work and many employers have yet to understand the triggers from managers that help to provide these."

Haid advised that understanding the variables that lead to greater retention is a critical component of an effective talent management strategy. "High attrition levels can impair an organization's ability to build relationships with clients and to run its operations efficiently. What's more, multinationals may experience the ultimate irony: due to the high cost of hiring and retraining, they may not be able to reap the cost savings that led them to India in the first place."

The study identified four key findings linked to the cause of employee attrition:

  • Gap in management skills. Managers play a vital role in an employee's desire to remain with the company. Study results revealed a significant deficit in the skills needed to lead their teams, mentor talent and manage effectively, with many managers promoted before they are ready.
  • Employee engagement critical. Job satisfaction, commitment to the job and organization, pride and advocacy lead to higher levels of engagement. Results revealed that a lack of engagement was the strongest single factor leading to intent to leave an organization.
  • Compensation less important. Study results indicated a more complex array of factors play a significant role, including an employee's sense of progress, competence, influence and opportunity to do meaningful work.
  • Lack of growth drives employees away. Opportunities for growth and development provide the incentive employees need to stay. According to results, employees who were offered clear opportunities for on-the-job growth were more likely to remain with their current employer.

To address the learnings gained from this research, Right Management identified four human resource practices as having the greatest impact on an organization's ability to retain employees:

  • Effective performance management. Implement a formal integrated performance management process to effectively assess, recognize and reward employees.
  • Nurture talent. Provide developmental opportunities for all employees, along with a structured career path, including stretch assignments, additional responsibilities, coaching and mentoring.
  • Support managers. Coach managers in fundamental leadership skills so they can effectively motivate, guide and assess their teams.
  • Promote organizational values. Make sure there is an organizational commitment to a larger social purpose. Encourage participation in company-supported initiatives and special interest groups. Highlight activities in your annual report.

"The challenge of attrition has far reaching implications -- not just for India, but for foreign firms operating in India and those who may be planning to enter this market. While retention continues to be an important concern for senior leaders and HR, employers are not powerless. There are actions organizations can take to retain employees so that they have the talent pool needed to meet current business objectives and future growth potential," said Haid.