Employee attrition in India's manufacturing sector during the global recession

Managerial Challenges

The global recession that hit the business world and to some extent the private sector saw unprecedented migration of employees across companies predominantly due to the uncertainty in the job security that from factual sacking or laying off by the organizations. Many people looked at the rate of unemployment and loss of jobs and even without proper prompting opted to jump ship. This trend of attrition became so common across the world and one of the most noted cases was in the Indian manufacturing industry. Amazingly, the trend of attrition in India was geared towards the software industry, a trend that left many managers and managements in dilemma of how to arrest it.

It is a commonplace in India to see people with barely any software acquaintance thirsting to be software engineers, people who can hardly spell the word Java are all flooding into the field. This paper purposes to look at the effect that this trend of mass migration to software industry may have on the manufacturing industry like the Tata steel and Tata motors. The paper will further look at the measures that can be taken to salvage the situation before it is too late and the manufacturing industry suffers a great deal.

The paper takes the perspective of the Tata Human Resource personnel who are geared towards taping all the available talent. The paper will also delve into the now common phenomenon of lateral movements in the employment sector that has seen mass migration of mid-level managers in pursuit of further education with a prospect of moving to other fields like knowledge outsourcing and software industry due to the better pays in those areas.

Background

According to India Current Affairs (2011), India churns out an average of 500,000 engineers each year. Of these qualified engineers, 22% are said to take up to 2 years before they land a job yet there is a grand shortage of skills in other countries like China. There has existed and there still exists a job scarcity in India against a background of mass engineering skills, consequently, there have been experienced a mass shift to the software sector by the young engineering graduates so as to make money.

However, there is an irony in the Indian manufacturing sector since there has been a mismatch between the skills and the compensation procedures and levels for the skills. Even though there is a mass expansion of the steel sector, infrastructure and the auto industries in general, there is a mismatch in the skills and the compensation. It is estimated that only 25% of the graduate engineers are qualified enough to work for multinationals and even these are grossly underpaid if and when they get jobs locally. The rest have insufficient technical skills, English inaptitude, inability to orally present an agendum and wanting team skills. This problem can be attributed to the satiation for money among the students and not the zeal to acquire the skills and knowledge (Express India, 2011).

The best, though selective universities, produce very few engineers and the private colleges produce imbalanced engineers who are not all round in their engineering practice. This may mean a lot of challenges in other areas that pertain to the economy of the country. Bearing this in mind and the expected massive expansion of the IT sector to approximately 1.7 million job slots within the coming four years, many organizations are already striving to upgrade their staff, sourcing for new talent as well collaborating with colleges for better qualified engineers upon graduation. This they do by offering remedial tutorials for the member of faculty as well as identifying good engineers to be undergraduates even from the remotest least heard about colleges in India. The manufacturing industry has as well engaged in an upgrading program where they offer in house further training for the fresh engineering graduates for a period of up to six months to make them ready for the job. The shortage is that dire.

The problem still persists and will take some time to be solved since even big IT firms in India like the Tata Consultancy Services still lack the manpower that is required. This is in stark contrast to the recent past where Tata consultancy needed to get in touch with the top engineering institutions and they would get all the manpower needed. The dilemma is that, in the past 10 years, the engineering institutions have more than tripled as postulated by All India Council of Technical Education most being the privately run institutions yet the problem persists.

In the software industry there has been an increase in the remuneration trends in the recent years with an estimated 10% to 15%. Indeed it is estimated by Payscale (2011) that the highest salaries are among the IT employees and there is still demand. This makes the software engineers to demand for higher remuneration which makes it hard for most organizations to retain them. The real labor insufficiency is beginning to sink in and with an estimated shortage of 500,000 professional engineers there is need to get concerned. Indeed, big companies like Google found it hard to source for enough engineers in India with the qualifications that were needed (Startup Dunia, 2011).

This has been coupled with a novel trend of institutions specializing in offering English language lessons for the communication and the technical workplace skills that a graduate may require before he gets into the job industry. These colleges will gap the difference that remains between the engineering skills and the on-job application of the learnt skills.

The private investment in the education sector is still widely allowed in India owing to the fact that an estimated 10% only of ages 18-15 manage to get to the college levels with a majority 40% of above 15 years being illiterate. There is now pressure to allow the private investors to venture into the higher education sector. This makes a lot of sense bearing the fact that majority of the foreign students in USA universities are from India and the numbers are fast swelling in Canada and Australia which is a situation that puts India at a cross roads as noted by Nandan M. Nilekani (2009)-the chief executive of Infosys by then.

It is worth noting that India has one of the most active populations in the world with literally half of its population under 25 years, the government should put more effort and time in educating its population and enhance their chances of being absorbed into well paying jobs that are skilled or else there will a constant backlog of unskilled and unemployable young men and women of India.

Introduction to Indian Automotive Industry

Problem Statement:

The automotive industry faces several problems, but in the scope of this paper, the challenges that the auto industry is combated with, Tata Industry in particular in their daily operations is divided into two:

Imbalance talent and skills; despite the fact that each year there are more than 500,000 graduate engineers churned from the local universities, they are hardly good enough to handle the hands-on challenges of the industry. This is further exacerbated by their reluctance to work in the local industries and this account for up to 70%. 5% are employable according to the Society of Indian Automobiles (SIAM)

Retention of employees; there have been of late a gradual increase in the trend of employees moving away from Tata motors and pursuing higher education there after joining other industries that have better remunerations. This trend has been realized during the last decade and is deemed to continue for the coming several years.

Literature Review

Recommendations

There is a need to ultimately tame the exodus from Tata motors, this can be done if the following are positively implemented within the organization:

Managing Attitudes and Perceptions Rationale

Reward power: there is an apparent need to offer rewards to employees who have been loyal and stayed in the organization for more than 10 years, this will make them grow more attached to their company and would not prefer moving even if they go for educational advancement, and they will always want to come back. The rewards can come in form of financial appraisals on pay rates, bonuses and other incentives.

Loyalty Bonus: Tata motors top management must start thinking of availing bonuses for employees who have been with them for some time. This can come in the form of providing sponsorship to go study courses that are relevant with their positions and responsibilities within the organization. This will revolutionize the attitude they have towards the company and enhance their loyalty further as the negative sentiments die away, consequently retaining their employees.

Training, seminars and workshops: This is the best way to deal with the employee apathy that exists in the public sector. The HRM should embark on the training of the staff members so as to equip them with the basic skills that would enable them keep in pace with the ever changing trends in the technological and social trends so as to be able to match the other competing sectors.

Allan Chapman (2010) indicates that there is need for every organization to conduct a conventional training which will encompass the essential work related skills as well as the knowledge. This should cover all the employees of Tata motors from the lowest cadre to the top management. The structured training is the one that is normally used but there is lots of resentment towards this type of training and a better method that will enable learning and personal development is the one that is recommended. Under good leadership, the training should be effective and sustained at intervals and regular periods for an effective eventual outcome.

Job rotation:

This is yet another strategy that Tata motors can use to ensure that the employees don't grow the fatigue of monotony in their course of work. This can be done in a manner that the same skills are required though the application can differ hence making it appear like a varying work environment. Rotation gives the employees the strength of diversification and a variation in the daily engagement.

Management steps to arrest the attrition

Recognition is one of the most essential aspects in the organization at all levels, this can be organized by setting up a prize giving day where leaders, agents, mechanics, engineers, managers and all other categories of employees who have performed in an outstanding manner are awarded and recognized. This type of reward and recognition fortifies the communication among the employees and across the varying levels and enhances the chances of the company to work as a team.

It is worth noting that group, be they informal or formal groups, will always be found in each and every organization. It is one of the strongest organizations within organizations that cannot die away since they give the people involved a sense of security, self-esteem, power, achievement, affiliation and even status to some extent. It is then incumbent upon the management to tap into the group dynamics to use it to the advantage of the Tata motors. The top management must encourage people to work as a team and go beyond just being a group.

Motivation; this is the ability to influence the way things are done by the employees and colleagues without necessarily using coercion and the actions lead to positive results for the company. It capitalizes on the employee behavior and can help shape the organizational culture. This can be achieved when the employees see the benefit of their hard works in material form or status. Motivation can therefore be achieved through some of these ways.

Appropriate reward system- apart from the cash reward system and the annual appraisal, there needs to be an implementation of intrinsic reward system among the employees. The Tata motors as an organization should implement Four Intrinsic motivation factors as an organization theory. The intrinsic motivation is one that the employees find by getting the sense enjoyment and purpose in what they are doing. In such a situation, the organization is not overly dependent on the CEO for the effective performance and can have a sustainable growth and momentum.

Operations management to arrest attrition

The four rewards that come with the above that help shape Tata motors towards the purpose and position are below as discussed by CEO Flow, (2008):

Sense of choice; where the Tata motors employees have the freedom to select a task that they are best at and contribute freely in the running of the organization since they deal with technical mechanical works.

Sense of competence; where Tata motors employees feel the sense of accomplishment in all that they do as opposed to the extrinsic situation where nothing is ever good enough to the manager.

Sense of meaningfulness; here the Tata motors employees feel that their tasks are equally important in the meeting of the general company goal and their effort and time spent is worth it, since they are consulted often by the organization managers for their ideas.

Sense of progress; is where the individual and project/assignment development and accomplishment is felt not that the organization is growing and leaving the participants behind.

Employing specific character traits to affect employee behavior: The Tata motors leadership should help envision the future and have the strong believe that each individual can make a difference in achieving the future. This should be done by bringing together leaders from across the enterprise to a regular meeting, training and consultation that instill the essential leadership development opportunities which ends up being on-the-job success for the Tata motors team.

The leader, as Vadim Kotelnikov (2001) should mould a group of people into a team which will serve as a formidable business advantage through their inspiring vision. They must be able to consolidate the individual effort into a synergy that will ensure the organizational culture is upheld and perfected each day. He will share the dreams about the organizational culture with others and cause them to willingly participate in achieving them. This is exactly what should happen at Tata motors as an enterprise. The top management must give leaders and managers the opportunity, from first line manager to senior executives to share with the rest of the organization members what they are doing and learning as they exchange best practices and techniques.

The Tata motors leadership should ensure that there is an up-to-date curriculum that is based on the contemporary leadership programs and uses concepts like the intensified action simulation, learning and leaders teaching/training leaders. This way Tata motors will managed to maintain the organizational culture throughout the enterprise branches.

Another suggestion is that Tata motors leadership should constantly re-examine their capabilities and process so as to ensure that the company remains as strong and as vital as the heritage that they posses. It is apparent that the culture of Tata motors mirrors the heritage of motor industry itself and the culture of innovation, aspiration and imagination is vital to retain in the Tata motors Company.

Managers also play a key role in the selection of the employees, career development management, succession arrangements and apt employee compensations. The managers are also charged with the financial development of the organization and through meeting these they play a central part in maintaining the organizational culture and Tata motors must ensure that these are tapped and put to proper use.