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MBM 101

Dayalbagh Educational Institute

(Deemed University)

Lecture 12 :Unit 3 Career Planning and Employee retention strategies

Ref Case : Rally India Ltd

John joined the company as Engineer Trainee (Gr I ) about 7 years back at the age of

21 yrs . Currently he has reached Asst Manager ( Gr III) . He dream was to become CEO of the company by the age of 45 years. He asked his boss Mohan about his growth plans in the company as he felt he may just reach GM keeping in view the present structure. Mohan could not give satisfactory reply. There were about 14 grades between ET and CEO. Promotions were given once in 2 to 4 yrs depending upon performance . John was always rated Outstanding in the performance evaluation. John also felt that he was just like any other employee and did not receive any feedback about his growth plans or special programs for his development .. John decided to leave the organization after 3 months of this incident . Mohan decided to ask HR as he wanted to retain John who was very talented . He asked for likely growth plans of John . What is the key issue here . ?????

Company X
New Grades
E band D band C band B Band Old Grades CEO

2 grades
4 grades 4 grades Mgr Mgr





4 grades A band Officers In old era career management involved moving people upStaff in vertical GM/VP GM and VP structures as psychological stroke for motivation based on age VP workers experience . New era career management is concerned with moving people in horizontal structures based on knowledge and skills


The occupational positions a person holds over many years .


The process for enabling employees to better understand and develop their career

skills and interests , and to use these skills and interests more effectively .
CAREER DEVELOPMENT The lifelong series of activities that contribute to a persons career exploration , establishment , success and fulfillment . CAREER PLANNING (Individual ) ; The deliberate process through which some one becomes aware of personal skills ,attributes , knowledge , motivations and establish action plans to attain specific goals Is an ongoing processes whereby an individual sets career goals and identifies means to achieve it.

Career planning : ( for an employee ) is the planned succession of jobs worked out by a firm to develop its employees. Succession Planning :Needs of organization to fill vacancies arising
out of attrition and retirement

It is planned succession to different jobs in the

organization so as to ensure internal availability of people as when required due to attrition , retirements, death etc .

Career Management old concept

Organizations have 10 to 15 grades. People grow every 2 to 3 yrs

in grades. Growth was based more on experience and age . Organizations have predicable future . Organizations decide & control how an employee can grow based on performance. The growth is in terms of hierarchy ie changes in grades or designations signify growth. One can grow continuously based on his performance in the organization Careers can be managed by the companies . Employ people for life long .

New concept
Organization has only 5 7 levels. Career growth is linked

to growth in expertise and competencies Employee to manage his Career . Organization only gives opportunity. The life of organization is not predictable as it can change hands , gets relocated , closed in every 5 to 10 years. Concept of life time employment is changed to life time employability. Excellence in operational performance is survival need where as excellence in strategic and developmental performance is key to growth. Hence people with competencies in strategic /expertise would move up as they display these competencies.

New concept
Careers are linked to acquisition of skills/ display of

competencies and not qualifications. This makes it very difficult as measuring competencies is very difficult . Employee needs continuous upgrading to be able to meet customer demands . Jon security is given by the customer and not employer. Designation are skill and expertise led within process.


OLD PARADIGM 1. Job Security 2. Vertical Career Paths 3. Organizational Loyalty 4. Career mapping 5. Academic Degree 6. Position/Title/ 7. Experience 8. Full-Time Employment 9. Retirement 10. Single Jobs/Careers

NEW PARADIGMS 1. Employability Security 2. Horizontal Career Paths 3. Team/Task Loyalty 4. Talent mapping . 5. Continuous Relearning 6. Competencies 7. Expertise 8. Contract Employment 9. Short careers 10. Multiple Jobs/Careers

Key Issue
Can an organization design career

planning (CP) for a employee in the company as a independent process ?. It is an outcome of many enabling conditions

Enabling conditions
1. 2. 3.


Organization has a clear structure , roles and responsibilities It has a defined competency matrix in terms of knowledge and skills required. It has a scientific measurement systems (PMS) in place and people are trained to assess on knowledge , skills , interests , attitudes etc. Top Management regularly review the cases of high performers and send direct and indirect messages through various signals and action plans about growth .

Enabling conditions
5. People are aware that they are identified for future growth in the company. 6. Development plans are made for such people 7. Job rotations and responsibility increase is done at regular intervals . 8. In addition to providing challenging roles , good reward and recognitions exist to retain the high performers .

Role of stakeholders in CP
Each stakeholder has a role to play.

The following key stakeholders are important in the

process of Career Planning .

Individual Superior /Manager/Boss Organization /HR

Role in Career Planning and Development

Accept responsibility for your own career

Assess your interests , skills and values

Seek out career information and resources Establish goals and career plans Utilize development opportunities

Talk with your manager about your career plans

Provide timely and accurate performance feedback Provide development assignments and support Participate in career development discussions with subordinate Support employee development plans

Employer/HR Communicates mission , policies and procedure Provide training and development opportunities including workshops Provide career information and career programs Offer a variety of career paths Provide career oriented performance feedback Provide mentoring opportunities to support growth and self directions Provide employee with Individual development plans Provide academic learning assistance programs

Possible Employer Career planning and development practices in organizations

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Internal Job postings linked to CP Formal education /tuition reimbursement Performance appraisal is linked to career planning Job rotations are linked to CP Counseling by HR is done for high performers Succession planning is linked to CP Formal mentoring is linked to CP Common career paths Dual ladder career paths Written Individual Capability Development Plan Career workshops Assessment centers Training programs for CP Special Education programs at best universities

Industry Practices
Employees who join a entry level

grow to become CEO and Key positions

Procter and ITC


Innovative Corporate Career Development Initiatives

1. 2. 3. 4.

Provide each employee with an individual budget for training and cost. Offer on site or on line career centers Encourage role reversal Establish corporate campus

5. 6. 7. 8.

Help organize career success teams Provide career coaches Provide career planning workshops Make computerized on and of off-line programs available for organizational career planning process.

Part II



New concept Retain only those who are star performers . Exit of non performers is important process for

retention of high performers

Key is long term stake

Financial and non financial means Financial
ESOPs Market linked compensation and not business linked Incentives linked to years of service for high performers

.Say bonus every 3 years of stay etc

Non Financial Role and growth Development opportunities

Summary :Retention is factor of


3. 4. 5. 6. 7.

Challenging roles & Goals Clear career path Developmental plans and job rotations Good postings Market linked compensation Long term stake in the company ESOPs and long term retention bonuses
Give me a challenging job , develop me , pay me and retain me

Retention Practices of some of Indian companies

Pl collect data for discussion in next class

Part II

Beyond career planning

Framework for presentation

Employee retention Purpose ? Reason ? What makes an employee stay on? Traditional retention tools Issues today Way forward - Where to start Experiences

Reason ?
Need of the organization to retain talented employees who

possess the critical competencies for competitive edge. People are the source of competitive advantage . Stable employees create a uniformity of culture . It takes considerable time to unload the baggage employee brings with him when recruited from outside. The image of company as good employer further helps it to attract the best talents.

The other reasons for retention.

The loss of an employee results in productivity loss.

The cost of recruitment is nearly 50 % of the salary

of the year.Sometimes he is totally misfit. The new incumbent takes takes one to 1.5 yrs to reach same level of understanding. It is often seen that replacement cost is higher than the person who leaves , thus affecting the morale of the people.

Theories which govern human needs structure

What makes a employee stay on?
Herzberg Theory

Hygiene factors

An average employee looks for good working conditions, a meaningful and respectful market based salary and conducive culture where he is in position to work with out hassles.

Theories which govern retention

Motivation factors

Vision and mission of the company,

Challenging goals, a clear cut role and responsibility , A good coaching boss , and recognition of ones achievement A caring culture of training and development.

The Traditional Retention tools

Entire focus on Hygiene factors Use Grade structures to artificial grow through promotions (16 to 20 grades ) Growth of employees for loyalty and qualifications . Use of Use of components in the pay which forces a person to stay with the company in order to be able to realize the accumulated benefits' Superannuation scheme etc.
Legal bonds for Service /Training .

The Traditional tools

Give large loans for housing etc so that employee stuck with the

place and not in a position to return. Sending people to foreign countries for training so as to extract a bond for some years. Silent handouts during festivals. Gifts etc for education/marriage for the children Holidays at the company cost. Jobs to Children Payment through assets/ ancillaries set up

old Paradigm
Market driven by Volumes

Sellers market. Supply less than demand.

Internal competition within India. Protected market. Employees believed in loyalty to the work place Employer was either benevolent or authoritative . Concept of life time employment. HR department responsible for retention

New paradigm

The Way-Present

Global competition.Supply more than demand.

Market is driven by quality and cost.

Changing values of young generation Downsizing and retrenchment is order of the day. IT is changing the way the work used to get done.Experience

is getting transferred to Systems. Lifestyles driven from materialistic needs. Employees more mobile and willing to go beyond home boundaries. Boss responsible for retention.

New Trends in Retention

Focus has shifted to short term retention say 3 - 5 yrs. The compensation is no longer a factor of experience /qualification

and age but competencies of the people. A high variable pay linked to performance Use of employee stock options and shares linked to encashment of options in a graded manner. Abolishing long term benefits , converting to short term. Continuously adjusting the salary in line with the market without waiting for 2/3 yrs.

Pitch the entry level salaries to very high levels to attract the

talent. Reduce the training period to few days against one / two years before one is put on the job. Give clear cut roles and responsibility and goals in the beginning of the year. Move horizontally to gain expertise in the field and pay them higher for expertise .

New trends
Keep giving higher responsibility based on Performance &

Potential displayed without waiting for some min yrs of working in a position. Advertise for positions internally rather than external recruitment. Redesign structures based on people talents .

Other Hygiene factors

Organizations provide flexible timings /events of joy

and enjoyment/celebrations. Recognition Policies which are friendly to employee and which enables employee to use his full CTC(Cost to the company). Organizations are having having re-look at their culture and policies..

Thank you