War for Talent Never Ended

The current global recession has created a series of challenges for companies across the globe, including in managing their talent. One key challenge was managing costs through workforce reduction. Layoffs are a problem anywhere in the world and in India, it becomes complicated because of lack of experience in handling these challenges. While reduction in variable pay-outs is now seen as acceptable and most companies implemented this reduction, only a few Indian companies acknowledged layoffs and did not hide behind performance as the reason for layoffs. At the same time, several companies came up with innovative solutions, for example, Satyam created a virtual bench which was a good solution for the unique problems faced by the company.

While campus hiring is efficient (good quality talent acquired at a low cost), it restricts the flexibility that organization has. For example, several companies froze salaries last year and got caught in a catch-22 situation. Because of competition for hiring in the campus, same company had offered a 10% salary increase over existing salary. Now, since the existing employees are denied an increase, a new joinee will get higher pay than employees with 1 year experience in the organization. Such an anomaly is a serious management challenge.

Nevertheless, one should not forget the basic fundamentals of talent retention. Growth, performance oriented culture, good HR practices, training and development remain the most important factor in retaining good talent. Employees seek growth and without enabling their intellectual, career and financial growth over business cycles, it is difficult to attract and retain talent. You pay for follies during the good times when economic recession bites. In the talent market, you pay for excesses during the recession, when good times arrive.

War for Talent never ended. In a recent article, McKinsey highlighted the increasingly global nature of competition for talent. When IBM ramps up its headcount in India from less than 10,000 to over 100,000 in less than 6 years, one needs to wonder how will other companies manage to fill the gap left. War for talent is fought at several levels. At times, it is about numbers and at times, it is about about who and not how many. One of the most visible symbols is the legal battle between Microsoft and Google when Microsoft VP moved to Google in China.

While recession creates a perception that talent is abundant, it is often misleading. Recessions don't last forever. Even though this recession seemed the worst to hit in decades, the fiscal and monetary policy response has been equally strong. Unlike last recession in 2001 to 2003, the decline was not gradual - at the same time, recovery has been equally sharp. US GDP growth of 3.5% in 3Q CY09 may look a statistical aberration, however, one cannot ignore the fact that it is a significant growth number. Indian economy is already back on a strong growth curve. This Diwali season was probably the best ever for most consumer companies.

It's now time for everyone to re-orient their mindset from cost cutting to growth.