Human Capital Outlook
Overview

How to retain your most valuable players

While you feel comforted by the loyal troops that remain, you better start paying attention to your commanders, says
-Vikram Bhardwaj


The other day, the HR head of one of the top Indian IT companies, a good friend of course, connected after a long time. On being asked the general mood, it was as if he was waiting to shoot, “the mood has never been better, even from an HR perspective, we are doing exceptional by hiring over 800 associates a quarter is no mean achievement!” And what about attrition? “Attrition is down to 9 percent, lowest that I’ve ever seen. Our people are loyal you see,” came the answer promptly. Unfortunately, the gentleman missed the writing on the wall.

The bread, butter and cheese for Indian IT companies come from contracts from overseas clients. Business development in key markets (read the US), is no longer a job which can be accomplished by just anyone who has had some technical background in IT. Instincts such as aggression and sales hunger are quite different from knowledge of C++, PeopleSoft HRMS and Java. Gone are those days when a project manager from Coimbatore, would be asked by his company to pack his bags and leave for Charlotte to perform a new role of business development.

The sales force of Indian software companies in the US has undergone a rapid transition as a result of the changing dynamics of the IT business. Body shopping is almost negligible, sales cycles are longer than one could imagine. This, combined with stiff competition from global consulting firms bagging of Indian offshore delivery practices has had tremendous evolution of the front ending/sales teams in key markets.

In the current scenario, for any IT firm, a synergized effort from its key employees in the US (which is the sweet spot for any Indian IT company), is required for business acquisition. Pre-sales, solution architecting, domain consulting and last but certainly not the least, ‘wine & dine’, all go hand in hand.

These business development guys are the MVPs (Most Valuable Players) of an IT firm. They are the hunters without whom the rest of the community shall be left redundant.

Losing these MVPs thwarts planning, strategy, growth, and client confidence (less visible but highly impacting). However, this MVP class has been considered to be genetically loyal to the firm, they have stuck along for years. Hence just as the IT world has mastered the art of leveraging domestic talent (read delivery teams), talent strategies for the front-ending business development teams have been lacking. As the same HR head pointed out, it is never a necessity to strategize efforts on the sales team in the US. Well, what is the incentive for them to leave? After all, they are the highest paid in the company, that too in dollars and then not to forget their stock options!

Unfortunately, things are not that static anymore. Stiff competition between the top Tier-I IT firms has resulted in ‘let’s get their key guy in the US’ attitude. The Tier-II firms are not far behind. In order to create a world class sales team, it is easiest for them to hire the MVPs of the top players.

One can argue that this predatory activity should be the same for all employees. Why highlight a special category? This is because this category is the scarcest of them all. A successful business development professional is hard to find, especially if the performance criteria are the following: What is his current run rate of revenues? Does he interact on a first name basis with his clients at the C level? What constitutes his rolodex of clients? Has he performed post ‘the bubble’ or was he riding a high wave during the body shopping days and has been on the slump ever since? Having been in the business for a sufficient time, I can tell you, professionals with such skills can essentially be classified as a restricted, if not an endangered species.

As a consequence of neglect, employment change in these IT companies will occur through ‘an employee churn’, those MVPs who have not been satisfied with their current employers but have been too cautious to move on shall be the first ones to move out. The HR considers them top talent, the people in the trenches who have stuck with the company ever since the chairman founded the company a decade back. But, as employees become confident and companies begin searching for quality candidates for specific openings, companies will experience an increase in attrition rates.

It’s hard to believe but mandates are being doled out to pull out en masse these aggressive MVPs for similar roles in the US. Little did my friend, the HR head, discover that in a matter of a quarter when his attrition rate was still hovering around 9 percent (I’m sure he is still elated), over 13 of his top guys in the US (our MVPs) have exited.

But why are those MVPs dissatisfied? This is a very critical question which no HR questionnaire based survey can decipher. Here is why…

The most common reason for such employees to shop around is that when it matters the most, their views are not incorporated in top decisions/ policies.

Here’s a classic case study. One of the top Indian IT firms with group revenues of over $700 million was based on a regional structure in the US, each region being headed by a business development director. Realizing that since the company had achieved a critical size, it was essential to get into a vertical based structure. The company went ahead with this thinking. However, what the company did not take into account was the impact on the business development team. So, from a position where a regional head was contributing over $50 million for the company from his region, in one stroke, he is now on a run rate of less than $5 million in the vertical assigned to him! His compensation, incentives, motivation and overall image declined without any decline in performance.

Consider that this gentleman decides to quit and does so in a month. What have you lost? In HR terminology, 80-100 percent of his salary to replace him, period. However, I can bet on my last word that the next incumbent (given that one is able to find a suitable replacement) who steps into his shoes may not be able to achieve even that $5 million in the given time period. Please factor-in a potential revenue loss of at least $5 million as an additional opportunity loss.

Again, one can argue that clients value the relationship and execution abilities of the IT vendor and would continue to dole out work regardless of the exit of the key business development guy who initiated the discussions.

However, going a little deeper, if the psyche of the end-user client is understood, one would realize that though the client gave business to the company, they were dealing with this front-ending business development professional who was the face of the company and with whom the client’s primary association lied. Their trust and faith was imposed and built by this guy. Can this trust and faith be replaced by someone who the client has not even heard of in the past?

Employees value relationships and development within the company, not compensation. Keeping that top talent requires you to recruit your employees as aggressively as you recruit external prospects. By not letting a hunter take on the role of a farmer, you are hindering the gradual evolution of skills. This can be understood by only those who have been in consulting.

IT companies in India should stop carrying this mind set and learn a few things from their global counterparts when it concerns managing their MVPs. Proactive measures towards MVPs will give them a sense that the company does not follow ‘slash and burn’ business policies, yet at the same time, it certainly would not make them believe that they are indispensable.

There is something you can act on now to be sure your MVP doesn’t become a free agent. The company can retain such talent only if it knows what it is pitching against.